Unit 2 Registration of Securities Flashcards
(34 cards)
Definition of Securities
*An investment in an enterprise for profit
with a third-party performing the
management
*An investment of money, in a pooled
enterprise, with third party management,
having an expectation of profit.
Security “Word Triggers”
If you see the word… its a security:
“Variable”
“Option”
“Interest in”
“Receipt”
“Certificate”
Exclusion from the Definition of
Securities
*Insurance policies (except variable)
Fixed/Indexed annuities
*Retirement plans (retirement plans may
contain securities, but they themselves are not)
*Commodity Futures contracts
Exclusions (Not BDs)
Agents
Banks
Savings Institutions
Trust Companies
Issuers
Exclusions (Not IAs)
LATE (incidental only)
Bank and Bank Holding Companies
Bona Fide Publishers
BD not paid for the advice
Investment Adviser Representatives
Exclusions (Not Agents)
When representing issuers in effecting transactions in certain exempt securities, when transactions are exempt from registration, or with existing people within the company with no comp.
Exclusions (Not Securities)
Currency
Commodities/Futures
Retirement Plans
Insurance (Fixed and Endowments)
Personal Residence
Non-negotiable CDs
Exempt Securities
*A security that does not have to register with SEC
* U.S. government securities
* Municipal securities
* Railroads or common carriers
* Insurance companies’ issues
* Canadian government securities
* Public utility issues
Exempt Transactions
The security is exempt from registration or
the transaction involves:
* Persons who are not required to register
(transactions that do not involve the public)
* Isolated, non-issuer transactions
* Transactions between issuers and underwriters
* Private placement offers to not more than 10 noninstitutional persons in a 12-month period
Exempt Securities (Examples)
Canadian Gov’t Securities
Religious/Education/Non-Profit Issues
Issued in connection with employee benefits plans
Financial institutions (credit unions in state of authorization)
Railroad/Public Utility/Etc.
Municipals
Money Markets
Federally Covered Securities
Money Markets (Examples)
Commercial Paper
Bankers Acceptance
Jumbo CDs ($100k+)
Repo/Reverse Repo
270 Days max
$50k min
Fed Covered Securities (Examples)
Reg D Private Placement
Investment Companies
US Gov’t
Exchange Listed (NYSE or other)
Exempt Transactions
Isolated Non-Issuer
Issuer to Underwriter
Collateral for Loans
Unsolicited
Pre-Org Certificates
Private Placement (10 offers, not 11, 12 months)
Financial Institutions
Fiduciaries (Not UGMA/UTMA/Custodial)
Make sure you understand
*Exempt Securities
*Exempt Transactions
*Exclusions from definitions
*And also the negatives; non-exempt
securities and transactions
*They CAN AND WILL test on the
differences
Make sure you understand
*Exempt Securities
*Exempt Transactions
*Exclusions from definitions
*And also the negatives; non-exempt
securities and transactions
*They CAN AND WILL test on the
differences
All of the following are Securities that are
Exempt from Registration EXCEPT:
A. Bond issued by the City of Toronto, Canada.
B. Bond issued by the United States Government
C. Stock requested by the Client to be Purchased
D.Preferred stock of ABC, whose common stock trades on NYSE
C. Stock requested by the Client to be Purchased
*Be very careful.
*Question asks about exempt SECURITIES.
*Unsolicited Transaction are exempt
TRANSACTIONS.
Issuer (Definition)
*Any person who issues or proposes to issue a security to raise capital
*IBM is the Issuer of IBM Bonds
*Microsoft is the Issuer of Microsoft Stock
*US Treasury is the Issuer of Treasury Bonds
Issuer Transactions
*Any transaction where the issuer directly benefits (receives $ from sale)
*All primary market transactions are issuer transactions (IPO)
Non-Issuer Transactions
- Any transactions where the issuer does not directly benefit (does not receive $)
- All secondary market transactions
Offer to Sell
*Any attempt to sell, obtain or solicit an interest in a security for money or other value.
*The Offer is the Attempt.
Exclusion from Offer to Sell
- Stock Dividend paid to shareholders and Rights
Offerings - Security pledged as collateral for a loan
- Gift of non-assessable securities
- Exchanges of securities due to mergers or
bankruptcies
Assessable Stock
- Not issued for many years
- Stocks that still have money owed on
them are assessable - “Gift of Assessable Stock is BOTH an offer AND a sale!”
Registration by Notification (Notice
Filing)*
Most commonly used by:
* Well-established, financially sound businesses
*Issuers who file federal registrations with the
SEC
*Becomes effective:
* Same time as SEC registration
**Not technically “Registering”
Registration by Coordination
Most commonly used by:
* Multi-state offerings
* Companies offering their shares publicly for
the first time (IPOs)
* Companies not listed on NYSE or NASDAQ that
need to issue additional shares
* Becomes effective:
* Same time as SEC registration
Registration by Qualification
*Can be used by any issuer
*Securities only being registered in 1 state (intrastate)
*Securities not eligible for other forms of
registration
*Becomes effective on Administrator’s order
