Exam Weight: ~2 questions (1.5% of exam)
This unit covers the definition of a security, state and federal registration requirements, exempt securities and transactions, issuer definitions and obligations, antifraud provisions, and state enforcement authority.
The Administrator, a term used constantly from here through the end of this chapter, means the chief securities regulator in each state: the state-level official or agency that enforces the Uniform Securities Act (USA). It is not a job title at a brokerage or advisory firm. The full breakdown of the Administrator's powers appears later in this chapter, in Authority of the State Securities Administrator.
What You'll Learn
- Master the definition of a security via the Howey Test, the three methods of state registration (filing, coordination, qualification), the exemption-versus-exclusion distinction, federal covered securities under NSMIA, the USA exempt-securities and exempt-transactions lists, Regulation D (the small-issue exemption up to $10M / 12 months, the traditional private-placement exemption, the verified-accredited-investor exemption), and Regulation A (Tier 1, Tier 2)
- Understand the definition of an issuer, the issuer-versus-non-issuer transaction distinction, registration of issuer agents and the four exclusions, and the role and risks of finders
- Learn the universal scope of USA antifraud authority (reaching exempt securities, exempt transactions, and federal covered securities alike), the Administrator's enforcement powers (stop orders, cease and desist, exemption revocation, investigation, criminal referral), and which exemptions the Administrator can and cannot revoke