NASAA Series 63Regulation of Securities and IssuersMedium
A private company sells its securities in a transaction involving offers to 8 persons within a 12-month period, with no advertising and no commissions paid to sales agents. This transaction most likely qualifies for which exemption under the Uniform Securities Act?
- AThe private placement (limited offering) exemption
- BThe isolated nonissuer transaction exemption
- CThe federal covered securities exemption
- DThe unsolicited order exemption
Show answer & explanationAnswer & explanation
Correct answer: A. The private placement (limited offering) exemption
The private placement exemption under the Uniform Securities Act generally applies to offers made to no more than 10 persons (other than institutional investors) in a 12-month period, with no general advertising and no commissions paid on sales to noninstitutional purchasers. This scenario fits all those criteria.
Why the other options are wrong
- B. Isolated nonissuer transactions involve a single, infrequent sale by a non-issuer, not multiple issuer sales.
- C. Federal covered securities exemption applies to nationally listed or registered securities, not private placements.
- D. Unsolicited order exemption applies to customer-initiated secondary market trades, not issuer private placements.
Private Placement Exemption
A transaction exemption for issuer sales made to a limited number of purchasers, generally no more than 10 noninstitutional offerees in 12 months, without advertising.
- No more than 10 noninstitutional offerees in 12 months
- No general advertising or solicitation
- No commissions paid on sales to noninstitutional purchasers
Memory trick: Ten or fewer, keep it quiet, no commission on the quiet ones