Definition of "Person"
Before you can understand who must register, who can be regulated, and who can be penalized under the Uniform Securities Act (USA), you need to know who qualifies as a "person."
The Broad Definition
- A person means an individual, a corporation, a partnership, an association, a joint-stock company, a trust (where the interests of the beneficiaries are evidenced by a security), an unincorporated organization, a government, or a political subdivision of a government
- The definition is intentionally broad: it covers both natural persons (individuals) and legal entities (corporations, partnerships, trusts, governments)
Think of it this way: "Person" under the USA is not just a human being. It is any entity that can buy, sell, or issue securities. A corporation, a city government, a trust, and an individual are all "persons."
Who IS a Person
| Entity | Notes |
|---|---|
| Individual | Any living adult with legal capacity |
| Corporation | Including LLCs and other business entities |
| Partnership | General and limited partnerships |
| Association | Trade groups, professional associations |
| Joint-stock company | A hybrid between a partnership and corporation |
| Trust | Where beneficiary interests are evidenced by a security |
| Unincorporated organization | Clubs, informal business groups |
| Government | Federal, state, or foreign governments |
| Political subdivision | Cities, counties, municipalities |
Who is NOT a Person
Three categories of individuals are excluded because they lack legal capacity or standing:
- Deceased individuals: no legal standing
- Minors: lack legal capacity to enter contracts
- Mentally incompetent individuals: lack legal capacity to enter contracts
Exam Tip: Gotchas
- A minor cannot be a "person" under the USA. If a question involves someone under 18 entering a securities transaction, they lack legal capacity. The same applies to deceased and mentally incompetent individuals.
Governments as Persons
This is one of the most counterintuitive parts of the definition. When a city issues municipal bonds, the city is acting as a "person" under the USA; specifically, as an issuer.
- State and local governments regularly issue bonds to fund infrastructure, schools, and public projects
- Under the USA, these governments are "persons" who issue securities
- This means the Act's provisions can apply to government issuers, not just private companies
Exam Tip: Gotchas
- A government IS a "person" under the USA. A municipality that issues bonds is a "person" acting as an issuer. "Person" is not limited to individuals or private entities.