NASAA Series 63Regulation of Securities and IssuersEasy
An agent employed by a broker-dealer offers a client a bond issued by the government of Canada. Under the Uniform Securities Act, this bond is:
- AExempt from registration, in the same manner as securities issued by the U.S. government
- BNot exempt, because only U.S. federal government securities are exempt
- CExempt only if it is sold through registration by coordination
- DExempt only if it carries an investment-grade rating from two rating agencies
Show answer & explanationAnswer & explanation
Correct answer: A. Exempt from registration, in the same manner as securities issued by the U.S. government
The Uniform Securities Act exempts securities issued or guaranteed by the United States, Canada, or any political subdivision or agency thereof, treating them like domestic government securities. No rating or registration process is required for this exemption to apply.
Why the other options are wrong
- B. Incorrect; the exemption extends to Canada, not just the U.S.
- C. Incorrect; exempt securities require no registration process at all.
- D. Incorrect; rating is not a condition of this exemption.
Canadian Government Securities Exemption
Securities issued by the U.S., Canada, or their political subdivisions/agencies are exempt securities under the USA.
- Applies to Canada and Canadian provinces, not just the U.S.
- No registration required for exempt securities
- Exemption is from registration, not from antifraud provisions
Memory trick: North America's governments get a free pass.