Securities - Other Exempt Transactions

Federal Covered Securities Transactions
Earlier, we looked at these securities and noted that the federal law that created the term was NSMIA, in 1996. Review the list again, and be sure to notice that investment companies registered under the Investment Company Act of 1940 (e.g. mutual funds) are federal-covered securities.

Included as exempt transactions are:

  • Non-issuer transactions by a federal covered investment adviser - A non-issuer transaction by a federal-covered investment adviser with investments under management in excess of $100,000,000 acting under discretionary authority.

  • Security Exchange - A transaction where no, or partial, cash is exchanged. This type of transaction is only valid after a hearing and approval by the Administrator. Note: This is not likely to form a Series 63 question, and is provided for informational purposes.

Transactions between Issuer and Underwriter

  • Secured Transactions - Transactions secured by a note, bond, mortgage or security agreement, if:
    • A general solicitation of the transaction is not made, or
    • A commission or other remuneration is not made.

  • Fiduciary Transactions - A transaction by an executor, administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian or conservator.

  • Sale or offer of sale to:
    • An institutional investor
    • Federally covered investment adviser
    • Any other person exempted by order of the Administrator

  • Sale by, or on behalf of, an issuer if:
    • In a 12-month period, no more than 25 people purchase the security in the state registered.
    • A general advertisement or solicitation is not connected to the offer.
    • Commission is not paid.
    • The issuer believes that purchasers' interest is purely for investment.

Transactions to Existing Owners

  • Offer to sell, but not a sale...
    Of a security that is not exempt from registration under the Securities Act of 1933.

  • Offer to sell, but not a sale...
    Of a security that is not exempt from registration under the Securities Act of 1933, if:
    • A registration has not been filed with the state, but is effective at a federal level,
    • A solicitation of interest is provided or
    • The Administrator has not issued a stop order.

Transactions between issuers and security holders of another person

  • Rescission offers - Offers of rescission are defined under civil liabilities.

  • Offer of sale to a person from another state.

Transactions of employee stock plans

  • Stock purchase, savings, option, profit-sharing, pension or other benefit plans for:
    • Directors, general partners, trustees, officers, consultants and advisers
    • Family members who acquire securities though gifts or domestic relations orders
    • Former employees, who were providing services when the securities were offered
    • Insurance agents, who are exclusive agents of the issuer

  • Transactions involving:
    • A stock dividend
    • A judicially approved reorganization

Federal Covered Securities
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