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
Related Articles
  1. Term

    Understanding the Maintenance Margin

    A maintenance margin is the minimum amount of equity that must be kept in a margin account.
  2. Investing Basics

    Brokers and RIAs: One and the Same?

    Brokers and registered investment advisors have some key differences. Here's what you need to know.
  3. Professionals

    Is a Google Robo-Advisor on the Horizon?

    It's possible that Google is looking to get into the robo-advisor business, either as a new venture or as a way to provide more benefits to employees.
  4. Economics

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
  5. Professionals

    Understanding Series 6

    Upon successful completion of the Series 6, an individual will have the qualifications needed to sell open end mutual funds and variable annuities
  6. Professionals

    Top Strategies on How to Become a Stock Broker

    Gunning to be a stock broker and want an edge? Here's some veteran advice.
  7. Trading Systems & Software

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
  8. Professionals

    Understanding Series 63

    Series 63 is a securities license that entitles the holder to sell securities in a particular state.
  9. Professionals

    How To Answer Option Questions On The Series 7 Exam

    Learn how to answer option questions on the Series 7 exam. Pass your Series 7 exam with the help of these tips.
  10. Economics

    When Will The Fed Raise Interest Rates?

    We discuss how the actions of U.S. central bank leaders (i.e. “The Fed”) will affect interest rates in the near future.
RELATED TERMS
  1. Series 6

    A securities license entitling the holder to register as a limited ...
  2. Comprehensive Automated Risk Data ...

    The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
  3. Corporate Financing Committee

    A regulatory group that reviews documentation that is submitted ...
  4. Division Of Reserve Bank Operations ...

    An entity under the Federal Reserve System that manages certain ...
  5. Series 79

    A examination to ensure a candidate is qualified to become a ...
  6. Research Analyst

    A person who prepares investigative reports on equity securities. ...
RELATED FAQS
  1. Is there a limit on the number of times I can re-take the Series 63 exam?

    There is no limit to the number of times a candidate may retake the Series 63 exam. The North American Securities Administrators ... Read Full Answer >>
  2. How long must I wait after failing the Series 63 exam before I can take it again?

    Waiting periods are in place for candidates who wish to retake the Series 63 exam. Between retakes, the waiting period is ... Read Full Answer >>
  3. My 120-day Series 63 exam window is about to close, but I need more time to study. ...

    Extensions are available on rare occasions. Candidates should apply for an extension with the North American Securities Administrators ... Read Full Answer >>
  4. Do I have to be a U.S. citizen to sit for the Series 63 exam?

    United States citizenship is not required for Series 63 test-takers. Candidates may take the exam inside or outside the U.S. ... Read Full Answer >>
  5. Are waivers granted to the 180-day waiting period to re-take the Series 63 exam?

    Candidates retaking the Series 63 exam must wait for 30 days after failing it on the first or second attempt. After failing ... Read Full Answer >>
  6. If I failed the Series 66, does the waiting period apply if I want to take the Series ...

    The waiting period only applies to retaking the same North American Securities Administrators Association (NASAA) exam. Candidates ... Read Full Answer >>
  7. How often, and how, is a series 63 exam updated?

    Series 63 exams draw questions from a test bank based on state regulations, the Uniform Securities Act and North American ... Read Full Answer >>
  8. Are series 63 exams given outside of the United States?

    Series 63 exams are offered at authorized testing centers around the world. The exam does not require U.S. citizenship. Test ... Read Full Answer >>
  9. Does NASAA or anyone else give out the series 63 exam questions?

    Outside of the proctored exam, no access to Series 63 exam questions is offered. Providing access to questions would invalidate ... Read Full Answer >>
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!