Quick Answer
Under the Uniform Securities Act, no one may offer or sell a security in a state unless it is registered, exempt, or a federal covered security. The prohibition reaches offers, not just completed sales, and "offer" and "sale" are defined broadly. Three state registration methods exist: filing, coordination, and qualification.
This foundational rule gates everything else in this unit. Before you can apply any of the three registration methods below, you need to recognize when the registration requirement is triggered at all, and how broadly the USA defines the conduct that triggers it.
What Is the General Registration Requirement?
Under the Uniform Securities Act (USA), it is unlawful for any person to offer or sell any security in a state unless one of three conditions is met:
- The security is registered under the Act
- The security or transaction is exempt under the USA's exempt securities provisions
- The security is a federal covered security. Depending on its category, it may still owe a state notice filing and fee, though an exchange-listed covered security owes neither
This prohibition applies to offers as well as sales. You cannot even solicit an offer to buy before the registration statement is effective.
What Counts as an "Offer" or "Sale"?
The USA defines "offer" and "sale" broadly:
- Every contract of sale or disposition of a security for value
- Every attempt or offer to sell or dispose of a security for value
- Every solicitation of an offer to buy a security for value
Exam Tip: Gotchas
The securities registration requirement prohibits offers AND sales. A common exam trap presents a scenario where someone "only" makes an offer (not a sale) and asks whether registration is required. The answer is yes: offers alone trigger the registration requirement.
What Are the Three Methods of State Registration?
The USA provides three distinct methods for registering securities at the state level:
| Method | Who Uses It | Effective Date |
|---|---|---|
| Registration by Filing (Notification) | Established issuers meeting strict financial tests, plus a second route for open-end funds and UITs | Seasoned-issuer route: concurrent with federal effectiveness. Fund and UIT route: business day of filing, or expiration of the existing registration, whichever is last |
| Registration by Coordination | Any issuer also registering with the SEC | Concurrent with federal effectiveness (if conditions met) |
| Registration by Qualification | Any issuer (including intrastate-only offerings) | Only when the Administrator orders |
Key points about these three methods:
- All three are subject to the same stop-order standards
- If a security is eligible for more than one method, the registrant chooses which to use
- A registered broker-dealer may file a registration statement on behalf of the issuer
Exam Tip: Gotchas
Registration by qualification is the ONLY method that does not require a concurrent federal registration with the Securities and Exchange Commission (SEC). It is used for securities offered exclusively within one state or in situations where no federal registration is filed.
What Should You Check on Exam Day?
- Confirm the question is testing an offer, not just a sale. Offers alone trigger the registration requirement.
- Identify which of the three conditions applies: registered, exempt, or federal covered.
- If a fact pattern names a method by its effective-date behavior, match it to filing, coordination, or qualification before answering.
- Remember a registered broker-dealer may file on the issuer's behalf, and the registrant chooses among methods it is eligible for.