Introduction
Welcome to Securities Registration Methods, the core unit that explains how securities become legally available for sale in a state.
Exam Weight: 9% (approximately 5 questions)
What You'll Learn
In this unit, you'll cover:
- Registration Requirement: The general rule that securities must be registered (or exempt) before being offered or sold in a state
- Definition of "Security": What instruments qualify as securities under the Uniform Securities Act (USA), including the Howey test for investment contracts
- Definition of "Issuer": Who counts as an issuer, special cases, and non-issuer transactions
- Registration by Filing (Notification): The simplest method, reserved for large established issuers
- Registration by Coordination: The most common method for issuers also registering with the Securities and Exchange Commission (SEC)
- Registration by Qualification: The most comprehensive method, and the only one not requiring federal registration
- Provisions Applicable to All Methods: Escrow, impounding, duration, prospectus delivery, and reporting
- Stop Orders: The Administrator's power to deny, suspend, or revoke registration
- Federal Covered Securities: Securities exempt from state registration but subject to notice filing
- Federal Registration (Securities Act Section 5): The three time periods governing offers and sales at the federal level
- Comparison of Methods: A side-by-side summary to help you distinguish the three state registration methods on exam day
Why This Matters
Securities registration is the backbone of state "blue-sky" laws. On the Series 63 exam, you need to know which method applies to a given issuer, what filing requirements each method demands, when registration becomes effective, and what powers the Administrator has to intervene. Mixing up these details (especially the time periods and effective dates) is one of the most common sources of lost points.
Let's start with the fundamental registration requirement under the USA.