Exemptions form State Securities Registration

Question 1

Exempt Issuers

Answer 1

-Gov entities (fed, state, local, foreign)
-Banks, savings and loans, trust cos, credit unions
-Insurance cos
-Non-profit orgs
-Common carriers (trucking, train, UPS)
-Companies regulated by Public Utility Holding Co Act of 1935
-Foreign NATIONAL issuers are exempt, cities are NOT except CANADA:
+Canadian national and provincial issuers are exempt

Question 2

Exempt securities

Answer 2

ST debt w following characteristics

• 9 month max maturity
• Rated in one of 3 highest categories by Fitch/Moody’s/S&P
• Denominations of $50k or more

Federal Covered Securities

• Listed on NYSE or Nasdaq (blue chips)
• Issued pursuant to Rule 506 (private placements over $5mm)
• Securities issued by open-end (mutual) funds, closed end funds and unit investment trusts
• *506 and investment cos must submit a Notice Filing to the Admin (consent to service of process, filing fee, copies of docs filed w Admin for fed reg)

Question 3

Admin’s power over Fed Covered Securities

Answer 3

• Can NOT cancel registration
• Can NOT prohibit sale in the state
• CAN investigate fraud in sale of the security in the state

Question 4

Exempt Transactions

Answer 4

-Non-Issuer Transactions (secondary market trades)
+isolated, non-recurring or unsolicited trades
+trades in securities subject to 34 act (reporting cos)
+Trades in securities listed on Toronto Stock Exchange

-Private placements
+limited to NO MORE THAN 10 non-institutional investors
+no commission paid for soliciting non-institutional investors

-Institutional Transactions
+w/ banks, B/Ds, other financial institutions or investment cos, also between issuer and underwriter

-Fiduciary transactions
+those involving a trustee, admin, executor, or sheriff

-Transactions in bonds secured by real estate mortgages (if sold as a unit)