State Reg Exemptions Flashcards
Exempt issuers
SEC registered investment companies, and state or Canadian province, or political subdivision thereof, is considered an exempt issuer. Foreign national governments with which the US has diplomatic relations
primary purpose of the securities registration requirements of the Uniform Securities Ac
ensure that proper disclosure is made available to potential investor
What purpose does a transaction exemption serve?
An exempt transaction relieves the security from any state advertising or registration requirements.
Exempt transaction include sales data
The administrator does not have the power to deny or revoke exemptions for
Stock issued by a bank organized under the laws of another state.
What’s considered an exempt transaction
Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or to a broker/dealer, whether the purchaser is acting for itself or in some fiduciary capacity is considered an exempt transaction
Sale of securities to financial institutions
bonds issued by a non-sovereign foreign government (cities, etc.) are not considered exempt securities unless guaranteed by the sovereign (German, in this case) government.
Securities exempt under the USA
bank issues, savings and loan issues, and common carriers or public utilities regulated by the US or Canadian federal government. Securities issued by bank holding companies that trade on SEC-regulated exchanges are federal covered securities and are not subject to state registration.
Facts regarding private placements
Private placements are transactions resulting from offers to no more than 10 noninstitutional persons in 12 months for investment purposes only. The offeror must be convinced that buyers are purchasing for investment. This means no immediate resale intentions are allowed on the buyer’s part. No commissions may be paid, directly or indirectly, for these transactions. However, sales to institutional purchasers are exempt from the limitations regarding number of sales, resale restrictions, and commissions. They may, therefore, be offered to more than 10 persons. (Remember that the term person is defined very broadly in the act.)
types of transactions can be entered into legally with unregistered, nonexempt securities?
Private placement offered to more than 50 institutional purchasers in the state.
The federal act defines an exempt private placement as a sale to no more than 35 nonaccredited persons. The Uniform Securities Act defines an exempt private placement as an offer to no more than 10 noninstitutional persons in a particular state. Under the USA, commissions are limited to sales made to institutional, not retail clients.
certain security exemptions that the USA does not grant the Administrator the power to deny.
Included in that list is any security issued or guaranteed by any bank organized under the laws of any state.
