Exemptions to Issuer and Security Registration

When it comes to exemptions to registration requirements for securities and issuers, the Uniform Securities Act (and in turn, the Series 63 exam) continues to be as much about the exemptions from the rules as the rules themselves. In this case, even the exemptions have exemptions. In the case of registering securities, there are two levels of exemptions, Section 402(a) and 402(b) exemptions.

Section 402(b) exemptions are those exemptions that must be granted individually for each transaction, whereas Section 402(a) exemptions apply to every transaction of a security. So, let’s start with the easy ones, or the Section 402(a) securities, that are always exempt.

SECTION 402(A) EXEMPTIONS

Under Section 402(a) of the Uniform Securities Act, the following types of securities are exempt from registration requirements:

1. 1. U.S. government and municipal securities. Securities (usually bonds) issued or guaranteed by the United States government, a state government, a city or municipality, or any agencies related to these government entities
2. 2. Foreign government securities. Securities (usually bonds) issued or guaranteed by a foreign government or its political subdivisions, with which the United States maintains diplomatic relations, as long as the security is recognized as a valid obligation by the issuer or guarantor
3. 3. Depository securities. Securities issued or guaranteed by a bank organized under U.S. law or by a bank, savings institution, or trust company organized and supervised under the laws of any state (usually a “Certificate of Depositâ