NASAA Series 63Regulation of Securities and IssuersMedium
The executor of a deceased client's estate sells securities held by the estate in order to distribute the proceeds to the heirs. Under the Uniform Securities Act, this sale is best characterized as:
- AA nonexempt transaction requiring registration, because a commission is likely charged
- BNonexempt, because estates are treated as issuers under the Act
- CExempt only if the executor is a registered agent
- DAn exempt transaction, because it is a bona fide sale by a fiduciary
Show answer & explanationAnswer & explanation
Correct answer: D. An exempt transaction, because it is a bona fide sale by a fiduciary
Sales by fiduciaries such as executors, administrators, guardians, conservators, sheriffs, marshals, receivers, and trustees in bankruptcy are exempt transactions under the Uniform Securities Act. The executor's role, not the presence of a commission, determines the exemption.
Why the other options are wrong
- A. Incorrect; commissions to a broker-dealer handling the sale don't negate the fiduciary exemption.
- B. Incorrect; the estate is not treated as an issuer in this context.
- C. Incorrect; the executor need not be a registered agent for this exemption.
Fiduciary Sale Exemption
Bona fide sales by executors, administrators, guardians, sheriffs, marshals, or trustees in bankruptcy are exempt transactions under the USA.
- Covers estate, guardianship, and court-ordered sales
- Fiduciary status, not commission, is key
- Antifraud rules still apply
Memory trick: Fiduciaries handling others' assets get a free pass.