Regulation of Securities - Other Definitions

The USA also defines the following terms:

  • A non-issuer transaction or non-issuer distribution is a transaction or distribution that is not directly or indirectly for the benefit of the issuer.
  • The term guaranteed means guaranteed as to payment of all principal and all interest.

Exam Tips and Tricks
The following is a list of additional securities-related information, mostly pertaining to issuers. Much of this will be on the test, so make sure you do not skip this section!

  • Unlawful sale - The USA clearly mentions that it is "unlawful for a person to offer or sell a security" in a state unless:
    • "the security is a federal covered security".
    • "the security, transaction, or offer is exempted from registration".
    • "the security is registered under" the USA.
  • Initial registration - Before an offer to sell a security can be made, a registrant (the issuer, insider or broker-dealer) must file a registration with the state Administrator.
  • Filing fees - Issuers are required to pay filing fees at both initial registration and annual re-registration. Filing fees fluctuate from state to state. If a filing fee is not paid (or an issuer fails to comply with a notice), the Administrator may issue a stop order "suspending the offer and sale of a federal covered security".
  • General filings - The registrant must supply general information regarding the securities to the Administrator, including the following:
    • The states where the securities will be solicited/offered
    • Amount of securities that will be issued
    • Any guidelines/judgments required by the SEC or other administrative or judicial entity
  • Registration records - The USA specifically states that, along with the initial registration statement, offerings must be accompanied by these:
    • A copy of the latest form of prospectus filed under the Securities Act of 1933
    • A copy of the articles of incorporation and bylaws, or their substantial equivalents currently in effect
    • A copy of any agreement with or among underwriters
    • A copy of any indenture or other instrument governing the issuance of the security to be registered
    • Copies of any other information or any other records filed by the issuer under the Securities Act of 1933 requested by the Administrator
  • Effective date - Once an offering is accepted by the Administrator, it is valid for one year after the date of approval (the effective date). Offerings may be renewed the following year, if the entire issue was not sold.
  • Effectiveness of registration statement - The USA states: "If the federal registration statement becomes effective before each of the conditions is satisfied or is waived by the Administrator, the registration statement is automatically effective ..." The conditions are those of registration records, above.
  • Periodic reports - Issuers may be required to file reports "to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering." The Administrator cannot require the reports to be filed more often than quarterly.
  • Post-effective amendments - A "registration statement may be amended after the effective date" to alter information, or to increase the number of securities to be offered. Of course, on amendment, an issuer may be required to pay a registration fee.
  • Form of subscription - It may be required that an offering "be sold only on a specified form of subscription or sale contract and that a signed or confirmed copy of each contract be filed" with the Administrator.
  • Escrow and impoundment -
    • Escrow may be required if the offering:
      • is issued within the last five years;
      • is "to be issued to a promoter for a consideration substantially less than the public offering price"; or
      • is to be issued "to a person for a consideration other than cash".
    • Impoundment simply means that proceeds from the sale must be put in escrow until "the issuer receives a specified amount from the sale of the security".
  • Offering outstanding - "Unless the Administrator determines otherwise, a registration statement cannot be withdrawn until one year after its effective date if any securities of the same class are outstanding ..."
Registration of Securities
Related Articles
  1. Professionals

    Career Advice: Financial Analyst Vs. Investment Banker

    Read an in-depth comparison about working as a Financial Analyst vs. working as an Investment Banker, two highly prestigious business careers.
  2. Professionals

    Who Needs to Take the Series 65?

    Most states require individuals to pass the Series 65 exam in order to act as investment advisors.
  3. 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.
  4. 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
  5. 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.
  6. 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.
  7. Professionals

    Understanding Series 63

    Series 63 is a securities license that entitles the holder to sell securities in a particular state.
  8. 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.
  9. Insurance

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
  10. Retirement

    6 Proven Tips For Series 6 Success

    These techniques can help you pass this test without the added stress.
  1. Series 6

    A securities license entitling the holder to register as a limited ...
  2. Series 79

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

    A person who prepares investigative reports on equity securities. ...
  4. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  5. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  6. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  1. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  2. If I have only a limited amount of time to study for the Series 6, what should I ...

    The Series 6 Investment Company and Variable Contracts Products Representative Qualification Examination is administered ... Read Full Answer >>
  3. What role does the 'chip cycle' play in the electronics sector?

    There are several highly acclaimed private Series 6 Exam courses in the United States. Many can be completed online. Popular ... Read Full Answer >>
  4. What does passing the Series 6 enable me to do?

    The Series 6, or the Investment Company Products/Variable Contracts Limited Representative, exam is administered by the Financial ... Read Full Answer >>
  5. What are the differences between the Series 6 exam and the Series 7 exam?

    The Financial Industry Regulatory Authority (FINRA) offers a variety of licenses that must be obtained before conducting ... Read Full Answer >>
  6. Do I have to successfully complete the Series 7 exam before I can register for the ...

    There are no prerequisites to register for the Series 63 exam. However, once you have registered for the exam, you must schedule ... Read Full Answer >>
Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center