Series 66: Definitions Of Issuer And Securities

Taken from our Series 66 Online Guide

Definitions of Issuer and Securities

The Uniform Securities Act attempts to make it very clear who would be considered an issuer of securities. An issuer is:

a person who issues or proposes to issue a security

In laymen’s terms, an issuer is someone who creates or publicly declares that they will be creating, a security that can be purchased by investors. A person must be 18 or over and legally competent. Thus, a 14-year-old, a dead person, or an individual who has been declared incompetent would not be considered a “person” under the USA. Even though the USA’s definition says “person,” the definition is not limited to “natural” living and breathing persons. The USA includes entities that are considered “legal persons,” including companies, governments and their agencies, and nonprofit associations, and you can imagine that most issuers of securities are entities rather than individuals.

What makes this definition more complex is that the word “security” is thrown in. The Uniform Securities Act addresses only financial instruments that are considered securities. The Uniform Securities Act specifically states that a security (which will inevitably be issued by an issuer) can be a:

  • Stock (preferred or common shares, treasury stock)
  • Bond (corporate or government)
  • Mutual fund (regardless of what it invests in)
  • Option (puts, calls, futures, etc.)
  • Oil and gas partnership
  • Certificates of deposit for a security (American Depository Receipts (ADRs) and Global Depository Receipts (GDRs))
  • Voting trust certificate
  • Warrants or rights for a security
  • Pass through certificates (mortgage-backed securities, CMOs)
  • Investment contracts (see Note below)
  • Real Estate Investment Trusts (REITs)

Note: In a decision called “The Howey Decision,” the U.S. Supreme Court came up with four characteristics that

Since you're reading about Series 66: Definitions Of Issuer And Securities, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 66
Please Enable Javascript
to view this content!