Registration by Coordination

Coordination exists because most issuers registering securities are doing so federally and in multiple states at once. Rather than duplicating a detailed state review, the state ties its own effectiveness to the SEC's under the Uniform Securities Act.

Who Is Eligible for Registration by Coordination?

Unlike registration by filing, coordination has no financial tests or operating history requirements:

• Any security for which a registration statement has been filed under the Securities Act of 1933 (SA) in connection with the same offering may be registered by coordination
• The federal and state registration statements need not be filed simultaneously or become effective simultaneously
• This is the broadest eligibility of the two methods that require a federal registration statement

What Must Be Filed for Coordination?

The filing requirements are moderate (more than filing, less than qualification):

• Three copies of the latest form of prospectus filed under the SA of 1933 (the federal prospectus)
• If the Administrator requires: articles of incorporation, by-laws, underwriting agreements, indentures, specimen of the security
• If the Administrator requests: any other information or documents filed with the Securities and Exchange Commission (SEC)
• An undertaking to forward all future amendments to the federal prospectus (other than an amendment that merely delays the federal effective date), no later than the first business day after the amendment is sent to or filed with the SEC, whichever occurs first
• Common-method information specified in the Act, plus consent to service of process

When Does Registration by Coordination Become Effective?

Registration by coordination becomes effective automatically at the moment the federal registration statement becomes effective if ALL three conditions are satisfied:

1. No stop order in effect and no stop-order proceeding pending
2. The registration statement has been on file with the Administrator for at least 10 days
3. A statement of maximum and minimum proposed offering prices and maximum underwriting discounts/commissions has been on file for 2 full business days (or a shorter period the Administrator permits), and the offering is made within those limitations

Important details:

• The Administrator may waive either or both of conditions (2) and (3)
• If the federal registration becomes effective before state conditions are met, the state registration becomes effective as soon as all conditions are satisfied

Exam Tip: Gotchas

Registration by coordination has a 10-DAY waiting period (vs. 5 business days for filing). The statement of maximum and minimum proposed offering prices and maximum underwriting discounts and commissions must be on file for 2 FULL BUSINESS DAYS. These are the most frequently tested time periods for coordination. Remember: the Administrator can waive both waiting periods.

• Do not confuse that max/min price statement with the price amendment. The price amendment is the final federal amendment carrying the actual offering price, filed with the SEC shortly before the federal registration takes effect. It is never the thing sitting on file with the Administrator for two full business days beforehand: that is the maximum and minimum proposed price statement.
• The price amendment and the post-effective amendment are two different documents. The price amendment is federal. What the registrant files with the Administrator after federal effectiveness is a post-effective amendment containing the price amendment's information. An answer choice calling the price amendment itself a post-effective state filing is wrong.

What Happens After the Federal Registration Becomes Effective?

After the federal registration becomes effective, the registrant must handle price amendment requirements:

• Promptly notify the Administrator by telephone or telegram of the federal effective date and time and the content of the price amendment, if any
• Promptly file a post-effective amendment containing any price-amendment information and documents
• Price amendment = the final federal amendment with the offering price, underwriting and selling discounts or commissions, proceeds, conversion rates, call prices, and other matters dependent upon the offering price

Failure to provide notification triggers serious consequences:

• The Administrator may enter a stop order without notice or hearing, retroactively denying effectiveness or suspending it until compliance
• However, if the registrant proves compliance, the stop order is void as of the time of its entry

Exam Tip: Gotchas

If the registrant fails to notify the Administrator of the federal effective date, the Administrator can enter a stop order WITHOUT the normal due process requirements (no prior notice, no hearing). This is an exception to the general rule that stop orders require notice and an opportunity for a hearing.

What Should You Check on Exam Day?

• Confirm no financial or operating-history test applies to coordination; eligibility turns only on a same-offering federal filing.
• Keep the 10-day and 2-full-business-day waiting periods straight, and remember the Administrator can waive either or both.
• Recall the amendment-forwarding undertaking's own deadline: the first business day after the amendment is sent to or filed with the SEC, whichever occurs first. This deadline is not the 10-day or 2-full-business-day waiting period.
• Distinguish the price amendment (federal, filed with the SEC before effectiveness) from the post-effective amendment (state, filed with the Administrator after effectiveness).
• Recall the consequence of a missed notification: a stop order without notice or hearing, which becomes void as of its entry if the registrant proves compliance.