Series 63 – Uniform Securities Agent State Law Exam Securities Registration Methods 2 — Questions and Answers
Question 1: Under registration by coordination, what must the issuer file with the state administrator in addition to the consent to service of process?
- Only a short-form notice summarizing the federal filing
- A copy of the federal registration statement and all amendments filed with the SEC (Correct answer)
- An independent state prospectus separate from the federal filing
- Audited financial statements not contained in the federal filing
Correct answer: A copy of the federal registration statement and all amendments filed with the SEC
In registration by coordination, the issuer must provide the state administrator with copies of the federal registration statement and all amendments, keeping the state informed of every update.
Question 2: When does a securities registration by notification become effective under the Uniform Securities Act?
- When the state administrator issues a formal written approval
- Upon filing if all statutory conditions are met, or after a specified waiting period if not contested (Correct answer)
- Only after a public hearing before the administrator
- On the same date the SEC declares the federal offering effective
Correct answer: Upon filing if all statutory conditions are met, or after a specified waiting period if not contested
Registration by notification becomes effective automatically upon filing if all required conditions are satisfied, or after a brief waiting period specified by statute if conditions are still being verified.
Question 3: Which of the following is a prerequisite for using registration by notification under the Uniform Securities Act?
- The issuer must be incorporated in the state where it is registering
- The offered securities must be senior in priority to outstanding securities
- The issuer must have been a continuous SEC reporting company for at least 36 months (Correct answer)
- The securities must be exempt from registration under the Securities Act of 1933
Correct answer: The issuer must have been a continuous SEC reporting company for at least 36 months
A key eligibility requirement for registration by notification is that the issuer must have continuously filed reports under the Securities Exchange Act of 1934 for at least the preceding 36 months.
Question 4: Under the Uniform Securities Act, the state administrator may deny, suspend, or revoke a securities registration if:
- The offering price is higher than that of comparable securities in the market
- The registration statement is incomplete or contains materially false or misleading information (Correct answer)
- The securities are not listed on a national securities exchange
- The issuer has more than 500 shareholders of record
Correct answer: The registration statement is incomplete or contains materially false or misleading information
The administrator may take action against a registration if the statement contains material misstatements, omissions, or is incomplete, as accurate disclosure is the foundation of the registration system.
Question 5: If the federal registration statement is withdrawn after a state registration by coordination has been filed, what happens to the state registration?
- The state registration remains effective for 30 days to allow orderly wind-down
- The state registration automatically terminates along with the federal withdrawal (Correct answer)
- The state registration continues independently as a registration by qualification
- The administrator must hold a hearing before the state registration can be terminated
Correct answer: The state registration automatically terminates along with the federal withdrawal
Since registration by coordination is tied to the federal filing, withdrawal of the federal registration statement automatically terminates the coordinated state registration.
Question 6: What is the primary purpose of the 'stop order' authority granted to the state administrator under the securities registration provisions of the Uniform Securities Act?
- To permanently prohibit an issuer from selling securities in the state forever
- To temporarily suspend the effectiveness of a registration while the administrator investigates potential violations (Correct answer)
- To require issuers to stop all advertising and promotional materials for their securities
- To prevent all broker-dealers in the state from selling the issuer's registered securities
Correct answer: To temporarily suspend the effectiveness of a registration while the administrator investigates potential violations
A stop order temporarily suspends a registration's effectiveness, giving the administrator time to investigate potential violations without permanently barring the issuer.
Question 7: As a condition of approving a registration by qualification, the state administrator may require:
- That securities be sold only to institutional investors earning over $200,000 annually
- That the issuer pay a fee equal to 5% of gross offering proceeds to the state
- That an escrow account be established to hold investor proceeds until a specified condition is met (Correct answer)
- That the issuer achieve a minimum share price within 90 days of the offering
Correct answer: That an escrow account be established to hold investor proceeds until a specified condition is met
The administrator may condition a registration by qualification on the establishment of an escrow account, protecting investors by ensuring proceeds are not disbursed until conditions are satisfied.
Series 63 – Uniform Securities Agent State Law Exam Securities Registration Methods 2
Under registration by coordination, what must the issuer file with the state administrator in addition to the consent to service of process?