NASAA Series 63Regulation of Securities and IssuersMedium
An officer of a corporation who is not a broker-dealer or agent sells his personally held shares of the company to a single acquaintance in a transaction that is not part of a series of similar sales. This transaction is most likely exempt under which provision?
- AThe unsolicited order exemption
- BThe isolated nonissuer transaction exemption
- CThe federal covered securities exemption
- DThe private placement exemption
Show answer & explanationAnswer & explanation
Correct answer: B. The isolated nonissuer transaction exemption
An isolated nonissuer transaction exemption applies to an infrequent, non-recurring sale of securities by a person other than the issuer, such as an individual shareholder selling personally held stock in a single transaction not part of a distribution.
Why the other options are wrong
- A. Unsolicited order exemption applies to buyer-initiated trades, not seller-initiated isolated sales.
- C. Federal covered securities exemption relates to nationally listed securities, not the nature of this transaction.
- D. Private placement applies to issuer sales to a limited number of purchasers, not a single shareholder's isolated sale.
Isolated Nonissuer Transaction
An exemption for infrequent, non-recurring sales of securities by a person other than the issuer, such as a single sale by a shareholder.
- Applies to nonissuer (secondary market) sales
- Must be isolated, not part of a series of transactions
- Commonly used by individual shareholders selling personal holdings
Memory trick: One-and-done sale by a shareholder is isolated and exempt