Quick Answer
An issuer is any person who issues or proposes to issue a security. Special rules assign the issuer role to a depositor or manager for certain trust-type securities, and oil, gas, and mining interests have no issuer at all. A non-issuer transaction is one that does not benefit the issuer, such as a secondary market sale.
Identifying the issuer matters because several registration rules, including filing eligibility, hinge on who that party is. This unit also uses the issuer concept to distinguish issuer transactions from non-issuer transactions, and to separate the issuer's role from the broker, dealer, and agent roles the exam tests alongside it.
Who Is the "Issuer"?
An issuer is any person who issues or proposes to issue any security.
This is straightforward for most situations: a corporation that sells its stock is the issuer of that stock.
What Are the Special-Case Issuers?
The Uniform Securities Act (USA) addresses several situations where the "issuer" is not the obvious entity:
- Certificates of deposit for a security (not bank CDs), voting-trust certificates, collateral-trust certificates, and unincorporated investment trusts that either have no board of directors (or persons performing similar functions) or are of the fixed, restricted management, or unit type: The "issuer" is the depositor or manager under the trust agreement (not the trust itself). The two trust qualifiers are alternatives, not a pair: either one alone is enough
- Certificates of interest or participation in oil, gas, or mining titles or leases: There is no issuer
Exam Tip: Gotchas
Oil, gas, and mining interests have NO ISSUER under the USA. This means they cannot be registered by filing/notification, which requires an "issuer" meeting certain financial tests. These securities would need to use coordination or qualification instead.
What Is a Non-Issuer Transaction?
A non-issuer transaction is one that is not directly or indirectly for the benefit of the issuer.
- A secondary market sale between two investors, where the issuer receives no proceeds, is a non-issuer transaction
- Non-issuer transactions may qualify for exemptions (for example, the isolated non-issuer transaction exemption)
The distinction matters because:
- Issuer transactions (initial offerings) require registration or an exemption
- Non-issuer transactions (secondary sales) may qualify for transaction exemptions that do not apply to issuer transactions
- All outstanding securities of the same class as a registered security are considered registered for non-issuer transactions while the registration is effective
How Do Issuer, Broker-Dealer, Agent, and Dealer Roles Differ?
The Series 63 frequently tests role-identification scenarios: a company is raising funds, and the answer choices list broker, agent, dealer, issuer. Knowing which party handles which responsibility prevents these from becoming guesses.
| Role | Responsibility |
|---|---|
| Issuer | The company itself. Creates and sells the new securities; files the federal and state registration or exemption filings; receives the proceeds |
| Broker-dealer (underwriter) | The firm hired to distribute the securities to the public. Acts as a principal/dealer or as an agent/broker depending on the arrangement |
| Agent | An individual (natural person) representing the BD or issuer in effecting transactions; never an entity |
| Dealer | A BD acting in a principal capacity, buying and selling for its own account |
| Rating agency | A separate third party (Moody's, S&P, Fitch); assigns credit ratings to debt issues. Not listed alongside broker/agent/dealer/issuer in role-identification questions |
Exam Tip: Gotchas
Role-identification questions typically list broker, agent, dealer, and issuer as answer choices. Match the responsibility to the role:
- Issuance and regulatory filings → issuer
- Distributing securities to the public → broker-dealer
- Effecting transactions as an individual → agent
- Trading for own account → dealer
- Rating the securities → none of those four; the answer is the rating agency
What Should You Check on Exam Day?
- Check whether a trust-type security has no board of directors, or is fixed, restricted management, or unit type; either qualifier alone assigns the issuer role to the depositor or manager.
- Remember oil, gas, and mining interests have no issuer at all, which rules out registration by filing for them.
- Distinguish an issuer transaction (proceeds benefit the issuer) from a non-issuer transaction (they do not), since only non-issuer transactions can use certain exemptions.
- Match role-identification answer choices to the right party: issuance and filings to the issuer, distribution to the broker-dealer, individual transactions to the agent, and own-account trading to the dealer.