Exempt Securities vs Exempt Transactions
Securities exempt from state registration - never from antifraud. Transactions that need no registration of the security, whatever the security.
What is the difference between Exempt Securities and Exempt Transactions?
Exempt security = the security itself never needs registration. Exempt transaction = a normally registrable security is sold in circumstances that don't require it.
| Exempt Securities | Exempt Transactions | |
|---|---|---|
| In one line | Securities exempt from state registration - never from antifraud. | Transactions that need no registration of the security, whatever the security. |
| Example | Selling Treasury bonds requires no state registration of the bonds - but lying about them is still fraud. | An executor selling a decedent's unregistered stock to settle the estate is an exempt transaction. |
| Unit | Uniform Securities Act & Registration | Uniform Securities Act & Registration |
| Series 65 | Section 4: Laws & Ethics | Section 4: Laws & Ethics |
What is Exempt Securities?
Include US government and agency securities; municipal securities; securities of foreign governments with which the US has diplomatic relations; securities of banks, savings institutions, trust companies and credit unions; insurance company securities (other than variable products); regulated public utilities and common carriers; nonprofit religious, educational and charitable issuers; short-term, highly rated commercial paper; and federal covered securities. The exemption attaches to the security itself.
What is Exempt Transactions?
Include isolated nonissuer transactions, unsolicited nonissuer orders through a broker-dealer, sales to institutional investors (banks, insurance companies, investment companies, broker-dealers, large pension plans), private placements (no more than 10 non-institutional offerees in the state in 12 months, buyers purchasing for investment, no commission for soliciting them), transactions by fiduciaries such as executors, trustees in bankruptcy and guardians, and bona fide pledges.