Series 66 For Dummies pdf p. 92-96

Nonsecurity investments

• collectibles
• fixed annuities
• precious metals
• grains
• real estate
• currencies

Nonexempt security 

• exempt, no registration
• non exempt, needs registration

issuer 

• issues, distributes, or proposes to issue a security
• companies
• governments-federal, state, and municipal
• if nonexempt, register in states where securities will be sold

issuer transaction 

• proceeds go to the issuer
• when a company raises money by selling securities to investor

non issuer transaction

• trading on exchanges like New York Stock Exchange or Nasdaq
• secondary trading

initial or primary offering

• issuer transaction with new issues
• IPO, initial public offering
• SPO, subsequent public offering-offering shares after initial shares offering
• IPO and SRO are issuer transactions

Quiz 2E
1. Which list of instruments is NOT composed of securities? Commodity futures contracts and fixed payment life insurance contracts are NOT securities. See list of six. 

2. The US Supreme Court defined an investment contract as having four components. Which of the following is NOT part of the four-part test for an investment contract? Management activity. The four parts are: 1)investment of money, 2) common enterprise, 3)expectation of profit, 4) solely from the effort of others
3. Nonexempt securities: usually required to be registered. Not always. Can skip registration if nonexempt security is sold in an exempt transaction 
4. A nonissuer transaction: the company does not receive the proceeds from the transaction

Registration of Securities under the Uniform Securities Act
1. securities must be registered under the Act to be sold
2. can be sold if security is exempt from registration
3. can be sold if it is a federal covered security

National Securities Market Improvement Act of 1996 NSMIA

• created federal covered security term

Categories of Federal Covered Securities

• securities issued by open end or closed end investment companies, unit investment trust, or face amount certificate company that is registered under the Investment Company Act of 1940
• securities offered by a US federal government issuer or a municipal issuer unless the municipal issuer is located in the state in which the securities are being offered
• securities listed on the New York Stock Exchange, the Chicago Stock Exchange, the Nasdaq Stock Market and other US exchanges
• rights, warrants, bonds, preferred stock
• securities under Rule 506(b) or 506(c) of Regulation D
• municipal bonds ex. City of New York bonds due 2020

Case study

• Colombus OH bond is federal covered. In Ohio the state Administrator could ask for certain details about the issue. Other states can't. 

Facts

• register with SEC NOT AUTOMATICALLY federal covered