securities registration

Question 1

securities registration statement

Answer 1

the initial application that must be filed with the administrator. this will specify the amount of securities to be issued, any other states in which the securities have or will be offered, and any adverse ruling by a state regulatory authority, a court or SEC in conjunction with the offering.

Question 2

security exclusion

Answer 2

an instrument that does not meet the definition of a security is not regulated under the USA and does not require registration.

Question 3

unsolicited order (exempt transaction)

Answer 3

a transaction requested from the customer, not a recommendation from the BD agent

Question 4

exempt security (definition)

Answer 4

securities that can be offered in a state without going through USA registration procedures.

Question 5

exempt security (examples)

Answer 5

• government securities
• financial institution securities
• commercial paper
• exchange-listed securities

Question 6

non-exempt securites

Answer 6

securities that are required to be registered under the USA

Question 7

3 types of state security registration

Answer 7

• notification (filing)
• coordination
• qualification

Question 8

national securities markets improvement act (NSMIA)

Answer 8

the purpose of this Act is to eliminate duplicate regulation at the federal and state level.

Question 9

registration by coordination

Answer 9

this registration method is used in conjunction with SEC registration. Provided there is a pending application to register a security with the SEC the security may also be registered concurrently with administrators in multiple states under the USA

Question 10

Escrow

Answer 10

Issuers using the registration methods of coordination or qualification may be required to hold the proceeds of the offering until certain minimums are obtained.

Question 11

registration by qualification

Answer 11

the most complex procedure for registering a new security and can be used to register any security. this method of registration is used for securities that will not register with the SEC but are required to register with the state, or for a security which is registered in only one state (intrastate security)

Question 12

Security (investment contract)

Answer 12

Howey Test

1. it must be an investment of money
2. in a common enterprise, with
3. the expectation of profits from the efforts of a third party

Question 13

underwriter transactions (exempt transactions)

Answer 13

a transaction between the issuer and underwriter, or between two underwriters, which would not require registration.

Question 14

transaction by a bona fide pledgee

Answer 14

an exempt transaction by the party who received the security as collateral for a loan. For example, a bank selling stock that was pledged as collateral for a loan that is now in default.

Question 15

federal covered security

Answer 15

securities that are registered with the SEC or exempt from registration with the SEC under the Securities Act of 1933. These securities are not required to be registered with each state.

Question 16

stop order

Answer 16

the administrator may issue this to deny, suspend, or revoke the registration of a security if it is in the best interest of the public AND any one of the several conditions apply.

Question 17

private placement

Answer 17

an exempt transaction under the USA resulting in offers to 10 or fewer retail customers during any 12 month period and there must be no commissions paid directly or indirectly.

Question 18

registration by filing

Answer 18

this may also be called registration by notification. This form of registration is only permitted or seasoned issuers who have been registered with the SEC. This is also the method used for mutual funds and UITs to register with the state, provided they had previously been registered within the previous 24 months.

Question 19

Effective date of registration (securities)

Answer 19

the date the administrator declares the issue eligible for sale within the state.

Question 20

Notice Filing

Answer 20

used by securities that are federal covered. The administrator may require the issuer to file any documents being filed with the SEC, along with a statement of the value of the securities to be sold in the state.

Question 21

isolated non-issuer transaction

Answer 21

a transaction conducted for a customer in the secondary market that does not occur with regularity

Question 22

exempt transactions

Answer 22

based on how the trade is processed, registration is not required. Typically, the public is not involved, these transactions are between institutional investors.