Series 63 – Uniform Securities Agent State Law Exam Exempt Transactions and Securities 1 — Questions and Answers
Question 1: Which of the following is an example of an exempt transaction under the USA?
- A public offering of new securities to retail investors
- An isolated non-issuer transaction by a registered broker-dealer (Correct answer)
- A secondary market offering through a broker-dealer
- A solicited sale of unregistered securities to the general public
Correct answer: An isolated non-issuer transaction by a registered broker-dealer
An isolated non-issuer transaction, such as an individual selling their own securities through a broker-dealer, is an exempt transaction under the USA.
Question 2: Under the USA, a private placement sold to no more than how many non-institutional purchasers in a 12-month period qualifies as an exempt transaction?
- 5
- 10 (Correct answer)
- 15
- 25
Correct answer: 10
Under the USA, a private placement sold to no more than 10 non-institutional purchasers in a 12-month period in a state qualifies as an exempt transaction.
Question 3: Which of the following securities is exempt from registration under the USA?
- Securities of a new technology startup
- Securities issued by a foreign government with which the US maintains diplomatic relations (Correct answer)
- Securities of a domestic corporation with fewer than 100 shareholders
- Securities sold only through one broker-dealer
Correct answer: Securities issued by a foreign government with which the US maintains diplomatic relations
Securities issued by foreign governments that maintain diplomatic relations with the US are exempt from registration under the USA.
Question 4: A sale of securities to a bank or insurance company is an example of what type of exemption under the USA?
- Security exemption
- Transaction exemption (Correct answer)
- Registration by coordination
- Federal covered exemption
Correct answer: Transaction exemption
Sales to institutional investors such as banks or insurance companies are transaction exemptions under the USA, not security exemptions.
Question 5: Under the USA, which of the following is NOT an exempt transaction?
- A transaction by an executor of an estate
- A transaction by a court-appointed trustee in bankruptcy
- A solicited sale of unregistered securities to 50 retail investors (Correct answer)
- A transaction between an issuer and an underwriter
Correct answer: A solicited sale of unregistered securities to 50 retail investors
A solicited sale of unregistered securities to 50 retail investors does not qualify as an exempt transaction and would require registration.
Question 6: Which of the following best describes the 'preemptive rights' transaction exemption under the USA?
- Sales to current shareholders through a rights offering require no registration (Correct answer)
- All sales to corporate insiders are exempt from registration
- Sales of options on listed securities are exempt
- Any transaction by a corporation's board of directors is exempt
Correct answer: Sales to current shareholders through a rights offering require no registration
A transaction involving an offer or sale to existing security holders pursuant to preemptive rights is an exempt transaction under the USA.
Series 63 – Uniform Securities Agent State Law Exam Exempt Transactions and Securities 1
Which of the following is an example of an exempt transaction under the USA?