Securities Registration

Under the Uniform Securities Act, securities must be registered with the state unless they qualify for an exemption.

State Registration Methods

Overview of Methods

Registration by Qualification

The most thorough registration method:

Required filings include:

• Registration statement
• Consent to service of process
• Financial statements
• Articles of incorporation
• Copy of prospectus
• Filing fees

Registration by Coordination

For offerings filed simultaneously with the SEC:

Automatic effectiveness occurs when:

• SEC registration becomes effective
• No stop order from state administrator
• All required documents filed with state
• Fees paid

Registration by Filing (Notice Filing)

For federal covered securities:

Federal Covered Securities

The National Securities Markets Improvement Act (NSMIA) created federal covered securities, which are exempt from state registration.

Categories of Federal Covered Securities

State Authority Over Federal Covered Securities

States RETAIN the power to:

• Require notice filings and fees
• Enforce antifraud provisions
• Investigate and prosecute fraud

States CANNOT:

• Require registration
• Impose merit review
• Deny or suspend offering

Exempt Securities

These securities are ALWAYS exempt from state registration:

Key Points About Exempt Securities

• The security itself is exempt, not just the transaction
• Remains exempt in any transaction
• Still subject to antifraud provisions
• No registration ever required

Exempt Transactions

The transaction is exempt, but the security may need registration for other transactions.

Common Exempt Transactions

Private Placement Exemption

Institutional Investor Exemption

Transactions with these buyers are typically exempt:

Security vs. Transaction Exemptions

Important Distinction

• Exempt security = Never register, any transaction
• Exempt transaction = This sale exempt, future sales may require registration
• Federal covered = Not subject to state registration, still requires notice filing

Antifraud Provisions

All securities transactions are subject to antifraud rules:

• Exempt securities
• Exempt transactions
• Federal covered securities
• Registered securities

Exam Tip: Exempt SECURITIES are always exempt (government, bank). Exempt TRANSACTIONS only exempt that specific sale. Federal covered securities require NOTICE FILING but not registration. ALL transactions are subject to ANTIFRAUD provisions.