NASAA Series 63 — All Questions

An issuer is conducting an interstate public offering and has filed a registration statement with the SEC under the Securities Act of 1933. To register the same offering in a state, the issuer would most appropriately use:

• a.No state registration, because a federal filing always preempts state law
• b.Registration by qualification
• c.Registration by notification
• d.Registration by coordination✓

Registration by coordination is designed for offerings registered federally under the Securities Act of 1933; the state filing rides alongside the federal one and becomes effective at the same moment as the federal registration, provided the state's timing and pricing conditions are satisfied. Qualification is the fallback for offerings with no federal filing. Notification is a streamlined route reserved for established issuers. Federal preemption applies only to federal covered securities, which is a separate concept from simply having filed with the SEC.Uniform Securities Act

Which statement about registration by qualification is correct?

• a.It is available to any issuer, requires the most detailed disclosure, and becomes effective when the Administrator so orders✓
• b.It may be used only when a federal registration statement has also been filed
• c.It becomes effective automatically two business days after filing
• d.It is available only to issuers listed on a national exchange

Qualification is the most demanding method, requiring extensive information about the issuer, its officers, its capitalization, and the use of proceeds, and effectiveness comes only when the Administrator orders it. It is the universal method, available to any issuer, and is typical for purely intrastate offerings with no federal filing. Automatic effectiveness on a short clock describes notification, not qualification.Uniform Securities Act

Registration by notification, sometimes called registration by filing, is generally available to:

• a.Established issuers that meet stated requirements such as a minimum operating history and no default on senior securities✓
• b.Only issuers of exempt securities
• c.Any issuer regardless of operating history, an interpretation that several states incorporated when they enacted the later revisions to the uniform act and its accompanying rules
• d.Only issuers making their very first public offering, so long as written notice describing the arrangement is delivered to the Administrator within the time fixed by rule for that category

Notification is the abbreviated method reserved for seasoned issuers that satisfy conditions on operating history, earnings, and the absence of defaults on debt or preferred dividends. A first-time issuer with no track record cannot use it and would turn to coordination or qualification. Exempt securities need no registration at all, so the method would be irrelevant to them.Uniform Securities Act

A mutual fund registered under the Investment Company Act of 1940 offers shares to residents of State G. With respect to State G, the fund's shares are:

• a.Required to be registered by coordination in the state
• b.Completely outside the state Administrator's reach for any purpose
• c.Required to be registered by qualification in the state
• d.A federal covered security, so the state may require only a notice filing, fees, and a consent to service of process, while retaining antifraud authority✓

Investment company shares registered under the Investment Company Act of 1940 are federal covered securities, and federal law bars states from requiring their registration. States may still require notice filings, collect fees, and demand a consent to service of process. Antifraud jurisdiction is never preempted, so the last choice overstates the preemption.Uniform Securities Act

A privately held manufacturer sells its unregistered notes to eight insurance companies and two banks. No general advertising is used. This offering is best described as:

• a.Both an exempt security and an exempt transaction
• b.Neither exempt nor permissible without state registration
• c.A sale of exempt securities, because institutional buyers were involved, on the view that the relevant exemption stays available to the party unless and until the Administrator revokes it by a formal order
• d.An exempt transaction, because sales to institutional investors are exempted from the registration requirement✓

This is the classic exempt-security versus exempt-transaction trap. The notes themselves are ordinary corporate securities with no special status, so nothing about the instrument is exempt; what is exempt is the manner of sale, namely a transaction with institutional buyers. Change the buyers to retail investors and the very same notes would require registration, which is exactly what distinguishes a transactional exemption from a security-level one.Uniform Securities Act

Which statement about United States Treasury bonds under the Uniform Securities Act is correct?

• a.They must be registered by coordination in each state, provided the customer is furnished the required written confirmation and the details are recorded on the books the firm must maintain
• b.They are exempt transactions rather than exempt securities, assuming the applicant has satisfied the net worth, surety bonding, and qualification-examination conditions the Administrator may impose
• c.They are exempt securities, so the exemption follows the instrument in every transaction✓
• d.They are exempt only when sold to institutional investors, a conclusion the NASAA model rules are commonly understood to support for a person already registered and in good standing elsewhere

Federal government obligations are listed as exempt securities, meaning the exemption attaches to the instrument itself and holds regardless of who buys or how the sale is arranged. An exempt transaction, by contrast, depends entirely on the circumstances of the particular sale. Because the security is exempt, no method of state registration is needed.Uniform Securities Act

An individual investor sells 200 shares of an unregistered local company directly to her neighbor in a one-time private arrangement, with no broker involved and no pattern of similar sales. This is best characterized as:

• a.A prohibited transaction under the act
• b.A sale of an exempt security
• c.A public offering requiring registration by qualification, provided the firm files the required consent to service of process and the Administrator does not enter an order to the contrary
• d.An isolated non-issuer transaction, which is an exempt transaction✓

An isolated non-issuer transaction, meaning a one-off resale by someone other than the issuer, is one of the enumerated exempt transactions. The shares themselves are ordinary corporate stock and are not exempt securities, so the exemption is transactional only. The antifraud provisions still apply, so the seller may not misrepresent the company even in an exempt transaction.Uniform Securities Act

A customer telephones her broker-dealer and asks to buy shares of a specific company that is not registered in the state. The firm made no recommendation and no solicitation. The trade is:

• a.Prohibited, because the security is not registered in the state, so long as written notice describing the arrangement is delivered to the Administrator within the time fixed by rule for that category
• b.Permitted as an unsolicited non-issuer transaction, an exempt transaction the firm may be required to document with a signed customer acknowledgment✓
• c.Permitted only if the customer is an institution
• d.Permitted only after the firm registers the security by qualification, since the Administrator generally treats this as a routine matter resolved through the state's ordinary coordination procedures

Unsolicited non-issuer transactions are exempt transactions, which is why an unregistered security may still be purchased when the order originates entirely with the customer. Administrators frequently require the firm to obtain a written customer acknowledgment that the order was unsolicited so the exemption can be verified later. The exemption is not limited to institutions, and no registration of the security is needed.Uniform Securities Act

Under the private placement exemption in the Uniform Securities Act, an issuer may make offers to no more than a limited number of non-institutional persons in any twelve-month period. Which additional condition applies?

• a.The buyers must purchase for investment rather than for resale, and no commission may be paid for soliciting non-institutional buyers✓
• b.The issuer must file a registration statement by notification
• c.The offering must raise at least one million dollars
• d.The buyers must all be residents of the same state

The state private placement exemption limits the number of non-institutional offerees in a twelve-month period, requires that buyers purchase for investment and not with a view to distribution, and forbids paying commissions for soliciting those non-institutional buyers. Institutional buyers are not counted against the limit. Residency and minimum offering size are not conditions, and filing a registration statement would defeat the purpose of an exemption.Uniform Securities Act

Which of the following is NOT an exempt security under the Uniform Securities Act?

• a.A general obligation bond issued by a school district, a municipal obligation the Act treats as fully subject to state registration in the hands of any ordinary retail purchaser
• b.Bonds issued by a nonprofit religious organization, instruments the statute declines to exempt because charitable issuers are treated exactly like ordinary corporate issuers
• c.A variable annuity contract issued by a licensed insurance company✓
• d.Common stock issued by a commercial bank

The insurance company exemption covers traditional insurance and fixed annuity products, but a variable annuity is a security whose value depends on a separate investment account and it is not exempt on that basis. Municipal obligations, securities issued by banks, and securities of nonprofit religious and charitable organizations all appear on the exempt security list. The identity or nature of the issuer is what drives most of these exemptions.Uniform Securities Act

A church issues bonds to finance construction of a new fellowship hall and sells them to members of the congregation. Under the Uniform Securities Act, these bonds are:

• a.Required to be registered by coordination
• b.Not securities at all
• c.Exempt transactions, because sales were limited to members, an interpretation that several states incorporated when they enacted the later revisions to the uniform act and its accompanying rules
• d.Exempt securities, because they are issued by a nonprofit religious organization✓

Securities issued by nonprofit religious, educational, charitable, and fraternal organizations are enumerated exempt securities, so the exemption travels with the instrument. The buyers' membership status is not what creates the exemption, which is why this is a security-level exemption rather than a transactional one. Debt instruments sold to raise money from investors are clearly securities, and the Administrator keeps antifraud authority over the sale.Uniform Securities Act

Which of the following is an exempt transaction under the Uniform Securities Act?

• a.A registered agent recommending a growth stock to a retail client, ordinary solicited retail business that the Act separately lists among the transactions entitled to the isolated-sale exemption
• b.A mutual fund's continuous offering to the general public, a distribution the statute exempts from transactional requirements because investment company shares are continuously redeemable
• c.A sale of securities by a court-appointed executor settling a decedent's estate✓
• d.An issuer's advertised public offering of common stock

Transactions executed by fiduciaries such as executors, administrators, sheriffs, marshals, receivers, trustees in bankruptcy, guardians, and conservators are enumerated exempt transactions because they arise from a legal duty rather than a sales effort. A recommended retail trade is ordinary solicited business. Advertised public offerings and continuous mutual fund offerings are the opposite of isolated or private transactions, though fund shares may escape state registration as federal covered securities, which is a different exemption entirely.Uniform Securities Act

In an administrative proceeding, a party claims that an offering qualified for an exemption from registration. Which statement is correct?

• a.Exemptions may be revoked only by a court
• b.The Administrator must prove that the exemption does not apply
• c.An exemption once claimed cannot be revoked
• d.The burden of proving an exemption rests on the person claiming it, and the Administrator may by order deny or revoke a specific exemption✓

The act places the burden of proving an exemption or an exception on the person who claims it, so a firm relying on an exemption should document the supporting facts at the time of the sale. The Administrator also has authority to deny or revoke an exemption for a particular security or transaction by order, subject to notice and hearing rights. No court order is needed for the Administrator to act.Uniform Securities Act

A seller relies on a valid exempt transaction and therefore does not register the securities. Which statement is correct?

• a.The antifraud provisions do not apply because the transaction is exempt, on the view that the relevant exemption stays available to the party unless and until the Administrator revokes it by a formal order
• b.The antifraud provisions of the act still apply to the offer and the sale✓
• c.The Administrator has no jurisdiction over the sale
• d.The seller may make optimistic projections without qualification, assuming the applicant has satisfied the net worth, surety bonding, and qualification-examination conditions the Administrator may impose

An exemption relieves the parties of the registration requirement only; it never suspends the antifraud provisions, which reach any offer or sale of any security. The Administrator therefore retains full jurisdiction to investigate misstatements in an exempt offering. Unfounded projections presented as fact would be actionable regardless of the exemption.Uniform Securities Act

Which statement about a state securities registration statement is correct?

• a.It may be filed only by the issuer itself
• b.It may be filed by the issuer, by any other person on whose behalf the offering is made, or by a registered broker-dealer, and it is generally effective for one year✓
• c.Once declared effective it remains effective indefinitely
• d.It may not be amended after the effective date under any circumstances

The act allows the issuer, a selling shareholder or other person on whose behalf the offering is being made, or a registered broker-dealer to file the registration statement. Effectiveness generally runs for one year from the effective date, so a continuing offering must be renewed. Post-effective amendments are permitted, most commonly to increase the number of shares registered.Uniform Securities Act

A small issuer registers a stock offering by qualification. The Administrator is concerned that the business plan cannot be carried out unless a substantial portion of the offering is sold. The Administrator may:

• a.Guarantee the offering by state funds
• b.Prohibit the offering outright without a hearing
• c.Require the underwriter to purchase any unsold shares, a conclusion the NASAA model rules are commonly understood to support for a person already registered and in good standing elsewhere
• d.Require as a condition of registration that the proceeds be impounded in escrow until a specified amount is received✓

The act lets the Administrator condition an effective registration on impounding the proceeds until the issuer receives a specified minimum amount, protecting investors in an undersubscribed deal. Escrow of proceeds is a condition, not an outright prohibition, and a denial would require notice and an opportunity for hearing. No state guarantees offerings, and the Administrator cannot force an underwriter into a firm commitment.Uniform Securities Act

After a securities registration statement becomes effective in a state, the Administrator may require the person who filed it to:

• a.Repurchase shares from any dissatisfied investor, provided the firm files the required consent to service of process and the Administrator does not enter an order to the contrary
• b.Guarantee a minimum rate of return to purchasers
• c.Register the securities again in every other state, provided the customer is furnished the required written confirmation and the details are recorded on the books the firm must maintain
• d.File reports, no more often than quarterly, showing the progress of the offering and the sale of the registered securities✓

The act authorizes the Administrator to require periodic reports, but not more frequently than quarterly, to keep the record of the offering current. Repurchase obligations arise only as a remedy for a violation, not as a routine condition. No securities registration ever carries a guaranteed return, and each state's registration requirement stands on its own.Uniform Securities Act

A corporation issues short-term notes to raise working capital. For the notes to fall within the commercial paper exemption, they must generally:

• a.Mature within nine months, be rated in one of the top categories by a nationally recognized rating agency, and be issued in large denominations✓
• b.Be guaranteed by a commercial bank
• c.Be sold only to individual investors
• d.Be convertible into common stock

The commercial paper exemption is limited to high-quality, short-term paper: a maturity of nine months or less, a top-tier rating, and denominations large enough that the instruments are bought by institutions rather than small retail investors. Convertibility would give the note an equity feature and take it outside the exemption. Neither a bank guarantee nor a retail-only distribution is part of the test.Uniform Securities Act

An investor is offered shares of a bank holding company that owns a single commercial bank. Regarding state registration, these shares are:

• a.Federal covered securities regardless of where they trade
• b.Exempt transactions in every case
• c.Not automatically exempt, because the exemption covers securities issued by a bank itself, not by a separate holding company✓
• d.Exempt securities, because the underlying subsidiary is a bank, since the Administrator generally treats this as a routine matter resolved through the state's ordinary coordination procedures

The exemption is drafted around securities issued or guaranteed by a bank, savings institution, or trust company; a holding company is a separate corporate issuer and does not inherit its subsidiary's status. Such shares may still qualify as federal covered securities if they are listed on a national exchange, but that depends on listing, not on the banking business. Nothing about the sale makes it an exempt transaction by default.Uniform Securities Act

Organizers of a proposed corporation solicit subscriptions from a handful of prospective shareholders before the company exists. For this preorganization certificate exemption to apply:

• a.A registration statement must be filed by qualification
• b.At least twenty-five subscribers are required
• c.The subscribers must each invest at least $10,000
• d.The number of subscribers must be limited, no commission may be paid for soliciting them, and no payment may be made by any subscriber✓

The preorganization certificate or subscription exemption is conditioned on a small, capped number of subscribers, the absence of any commission for soliciting them, and the fact that no subscriber actually pays money at that stage. A minimum investment is not part of the test, and requiring a large number of subscribers would contradict the exemption's private character. Because it is an exemption, no registration statement is filed.Uniform Securities Act

Registration by coordination becomes effective simultaneously with the federal registration if certain conditions are met, including that:

• a.The Administrator personally approves the merits of the offering, a conclusion the NASAA model rules are commonly understood to support for a person already registered and in good standing elsewhere
• b.The offering is limited to intrastate purchasers
• c.The issuer has at least a five-year operating history
• d.No stop order is in effect, no proceeding is pending, and the statement has been on file the required period with the required pricing information✓

Coordination is effective at the same time as the federal registration if no stop order or proceeding is pending, the statement has been on file the specified number of days (e.g., 10), and a statement of the maximum and minimum offering prices and maximum underwriting discounts has been on file (USA §303).

Which of the following is a 'federal covered security' whose registration a state may NOT require?

• a.An intrastate offering by a local bakery
• b.Common stock listed on the New York Stock Exchange✓
• c.A limited partnership interest sold only in one state
• d.Unregistered stock of a private start-up

Securities listed (or senior to securities listed) on the NYSE, Nasdaq, and other qualifying markets are federal covered under NSMIA; states may require only a notice filing and fees, not registration (NSMIA §18; USA §401 'federal covered security').

Securities sold under SEC Rule 506 of Regulation D are:

• a.Prohibited in most states
• b.Exempt from the antifraud provisions of state law
• c.Required to be registered by qualification in each state, so long as written notice describing the arrangement is delivered to the Administrator within the time fixed by rule for that category
• d.Federal covered securities; a state may require a notice filing and fee but not registration✓

Rule 506 offerings are federal covered securities under NSMIA; states may require a notice filing (a copy of the SEC Form D) and fees, but not registration, and antifraud authority remains (NSMIA §18; USA).

A general obligation bond issued by a county to build a courthouse is:

• a.Merely an exempt transaction, not an exempt security
• b.An exempt security, because obligations of a state or its political subdivisions are exempt✓
• c.Required to be registered by qualification
• d.A federal covered security requiring a notice filing, provided the firm files the required consent to service of process and the Administrator does not enter an order to the contrary

Securities issued or guaranteed by a state, a political subdivision, or a public agency are exempt securities; the exemption attaches to the instrument in any transaction (USA §402(a)(1)).

Under the Uniform Securities Act, securities issued by a foreign national government are exempt securities when:

• a.The issuer is any country in the world
• b.The bonds are denominated in U.S. dollars
• c.The United States maintains diplomatic relations with that foreign government✓
• d.The bonds are rated below investment grade, since the Administrator generally treats this as a routine matter resolved through the state's ordinary coordination procedures

The exemption covers securities issued or guaranteed by a foreign government with which the United States maintains diplomatic relations (foreign political subdivisions are treated more narrowly) (USA §402(a)(2)-(3)).

Which of the following is an exempt security under the Uniform Securities Act?

• a.A promissory note sold door-to-door to retail investors, an interpretation that several states incorporated when they enacted the later revisions to the uniform act and its accompanying rules
• b.Stock of a newly formed technology start-up
• c.A limited partnership interest in a strip mall
• d.Securities of a public utility or common carrier regulated as to rates by a governmental authority✓

Securities issued by regulated public utilities and common carriers subject to rate regulation are exempt securities (USA §402(a)(8) utility/common-carrier exemption).

Common stock issued by an insurance company organized under the laws of a U.S. state and authorized to do business there is:

• a.Never a security of any kind
• b.A federal covered security in all cases
• c.An exempt security under the Uniform Securities Act✓
• d.Required to be registered by coordination, on the view that the relevant exemption stays available to the party unless and until the Administrator revokes it by a formal order

Securities issued by a domestic insurance company authorized to do business in the state are exempt securities—note this differs from a variable annuity, which is a non-exempt security (USA §402(a)(6)).

A non-issuer transaction in an outstanding security is exempt when the security and current issuer information appear in a recognized securities manual such as Standard & Poor's or Moody's. This is commonly called the:

• a.Isolated issuer exemption
• b.Commercial paper exemption
• c.Manual (secondary-trading) exemption✓
• d.Private placement exemption, assuming the applicant has satisfied the net worth, surety bonding, and qualification-examination conditions the Administrator may impose

Many states exempt non-issuer transactions in securities listed in a recognized securities manual with current published financial information—the 'manual exemption' (USA §402(b) non-issuer transactions; NASAA).

An issuer distributes additional shares to its existing shareholders through a rights offering, paying no commission for soliciting the exercise. This is most likely:

• a.A prohibited transaction
• b.An exempt transaction (a transaction with existing security holders)✓
• c.A federal covered security in every case, provided the customer is furnished the required written confirmation and the details are recorded on the books the firm must maintain
• d.Registration by coordination

Transactions under a right, warrant, conversion privilege, or offer to existing security holders are exempt transactions when no commission is paid for soliciting the holder (USA §402(b) existing-holder exemption).

A bank sells stock it holds as collateral after the borrower defaults, in a bona fide effort to liquidate the pledged collateral. This sale is:

• a.A public offering requiring registration, a conclusion the NASAA model rules are commonly understood to support for a person already registered and in good standing elsewhere
• b.An exempt transaction (a bona fide pledgee liquidating collateral)✓
• c.A prohibited transaction
• d.An issuer transaction

A sale by a bona fide pledgee liquidating pledged collateral, with no purpose of evading the Act, is an enumerated exempt transaction (USA §402(b) pledgee exemption).

An unregistered corporate bond is sold only to insurance companies, banks, and registered investment companies. The sale is:

• a.Automatically a federal covered security
• b.An exempt transaction, because sales to institutional and financial buyers are exempt regardless of their number✓
• c.Prohibited because the bond is unregistered
• d.Exempt only if fewer than ten institutions buy, so long as written notice describing the arrangement is delivered to the Administrator within the time fixed by rule for that category

Transactions with institutional and financial buyers (banks, insurers, investment companies, and the like) are exempt transactions with no numerical cap; the bond itself remains a non-exempt security (USA §402(b) institutional-buyer exemption).

Under the Uniform Securities Act's private-placement exemption, the limit applies to the number of:

• a.States in which the offering is made, provided the firm files the required consent to service of process and the Administrator does not enter an order to the contrary
• b.Shares that may be sold
• c.Non-institutional persons to whom offers are directed in a 12-month period (offerees), excluding institutions✓
• d.Purchasers who actually buy

The exemption caps offers to non-institutional persons (commonly ten) in any 12 consecutive months; offers to institutions are not counted, and the cap is on offerees, not purchasers (USA §402(b)(9) limited-offering exemption).

The Administrator may enter a stop order denying, suspending, or revoking the effectiveness of a securities registration statement when:

• a.Investors are dissatisfied with performance, since the Administrator generally treats this as a routine matter resolved through the state's ordinary coordination procedures
• b.The statement is incomplete or misleading, or the offering would work a fraud, after notice and an opportunity for a hearing✓
• c.A competitor of the issuer requests it
• d.The issuer's stock price has fallen

Stop orders rest on statutory grounds—a materially misleading or incomplete statement, fraud, excessive underwriting compensation, or noncompliance—and require notice and an opportunity for a hearing (USA §306).

A securities registration statement in a state is generally effective for:

• a.The entire life of the security, an interpretation that several states incorporated when they enacted the later revisions to the uniform act and its accompanying rules
• b.One year from its effective date, and may be renewed for a continuing offering✓
• c.Thirty days
• d.Five years

A state securities registration is generally effective for one year from its effective date; a continuing offering must be renewed, and post-effective amendments may increase the amount registered (USA §305).

A purely intrastate offering that is not registered with the SEC would be registered in the state by:

• a.Coordination
• b.Notice filing
• c.Notification
• d.Qualification✓

Qualification is the method for offerings with no federal registration, including intrastate deals; coordination requires a concurrent federal (Securities Act of 1933) filing (USA §304).

For an offering sold in the state under Rule 506 (a federal covered security), the Administrator may require the issuer to file:

• a.Nothing at all
• b.A surety bond
• c.A notice filing (a copy of the SEC Form D) with a consent to service of process and a fee✓
• d.A full registration statement by qualification, on the view that the relevant exemption stays available to the party unless and until the Administrator revokes it by a formal order

For Rule 506 federal covered securities, states may require a notice filing consisting of the documents filed with the SEC (Form D), a consent to service of process, and a fee—but not registration (NSMIA §18; USA).

The key difference between an 'exempt security' and an 'exempt transaction' is that:

• a.Only exempt securities remain subject to the antifraud rules, assuming the applicant has satisfied the net worth, surety bonding, and qualification-examination conditions the Administrator may impose
• b.Exempt transactions never involve securities
• c.Exempt transactions require prior SEC approval
• d.An exempt security's exemption attaches to the instrument in any sale, while an exempt transaction's exemption depends on the circumstances of the particular sale✓

An exempt security (e.g., a Treasury bond) is exempt in the hands of any seller; an exempt transaction (e.g., an unsolicited order) is exempt only because of how, where, or to whom it occurs. Both remain subject to the antifraud provisions (USA §402).

An investment contract issued in connection with an employees' pension or profit-sharing plan is:

• a.An exempt security under the Uniform Securities Act✓
• b.Always a prohibited security
• c.A federal covered security requiring a notice filing
• d.Required to be registered by coordination

The Act exempts investment contracts issued in connection with an employees' stock purchase, savings, pension, or profit-sharing plan (USA §402(a)(11)).

Which of the following is most likely an 'isolated non-issuer transaction' exempt under the Uniform Securities Act?

• a.An issuer's advertised public offering
• b.A dealer continuously making a market in a stock
• c.An individual's one-time private sale of stock she owns to a single buyer, not part of a repeated pattern and not through a dealer✓
• d.A broker-dealer's ongoing secondary-market trading for many customers, provided the customer is furnished the required written confirmation and the details are recorded on the books the firm must maintain

An isolated non-issuer transaction is an infrequent, one-off resale by a non-issuer; a dealer's regular secondary trading is not 'isolated' (USA §402(b)(1)).

A court-appointed conservator sells securities from the estate of an incapacitated person to pay for the person's care. This sale is:

• a.A prohibited transaction
• b.An exempt transaction, because sales by fiduciaries such as conservators, executors, receivers, and trustees in bankruptcy are exempt✓
• c.An issuer transaction requiring registration, a conclusion the NASAA model rules are commonly understood to support for a person already registered and in good standing elsewhere
• d.Automatically a federal covered security

Transactions by executors, administrators, sheriffs, marshals, receivers, trustees in bankruptcy, guardians, and conservators are enumerated exempt transactions (USA §402(b)(3)).

As a condition of registering a speculative offering by qualification, the Administrator may require that:

• a.The state insure the offering against loss
• b.The underwriter purchase any unsold shares
• c.The proceeds be impounded (escrowed) until a specified minimum is raised, and may prescribe the form of subscription✓
• d.The issuer guarantee investors a rate of return, so long as written notice describing the arrangement is delivered to the Administrator within the time fixed by rule for that category

The Administrator may condition registration on impounding proceeds until a specified amount is raised and may prescribe the subscription or escrow form; it cannot guarantee returns or force an underwriter to buy shares (USA §305).