Welcome to Securities Act Framework and Offering Types: the statutory skeleton that every private placement you sell hangs on, from the definitions that decide whether the Securities Act applies at all to the liability rules that follow a sale gone wrong.
Exam Weight: 3 scored items within Function 1 (25 items / 50% of exam)
What You'll Learn
In this unit, you'll cover:
- The Registration Requirement and Its Key Definitions: How the Securities Act defines security, issuer, underwriter, prospectus, and offer, and what the registration requirement prohibits at each stage of an offering
- Exempt Securities vs. Exempt Transactions: The difference between a security that is permanently exempt from registration and a transaction that is exempt only once, and why that difference decides who worries about resale
- Classes of Securities in a Private Offering: The five building blocks (equity, debt, convertible securities, warrants, and units) that show up in almost every offering memorandum
- Types of Securities Offerings: How a primary offering, a private placement, and a private investment in public equity (PIPE) relate to each other
- Reporting Company Status and PIPE Resales: Why a PIPE issuer's existing public reporting does not by itself solve its investors' resale problem
- Broker-Dealer Registration for Placement Agents: Who must register as a broker-dealer to solicit or effect sales in a private offering
- Civil Liability for Registration and Disclosure Violations: The two separate liability standards a seller faces, one for selling without registration or an exemption and one for a material misstatement or omission
Why This Matters
Every other unit in this course assumes you already know this framework. Unit 3's Regulation D thresholds, Unit 4's investor-qualification tests, and Unit 5's Regulation A and Regulation S rules are all exceptions built on top of the registration requirement this unit teaches.
- The exam tests whether you can tell an exempt security from an exempt transaction, since one question type hinges entirely on that distinction.
- Placement agents are broker-dealers for registration purposes, so a scenario about who may lawfully sell an offering tests this unit, not a later one.
- The two liability standards in this unit (violating the registration requirement versus misstating a material fact) are commonly tested against each other, so knowing which applies to a given fact pattern is worth more than either standard alone.
Let's start with the registration requirement and the key definitions it depends on.