NASAA Series 63Regulation of Securities and IssuersEasy
A religious organization issues bonds to the public to help fund construction of a community center, with all proceeds used for the organization's charitable purposes. Under the Uniform Securities Act, these bonds are:
- AExempt only if registered by notification with the Administrator
- BNot exempt, because they are offered to the general public
- CExempt securities, because they are issued by a nonprofit religious, educational, or charitable organization
- DNot exempt, because only government entities may issue exempt bonds
Show answer & explanationAnswer & explanation
Correct answer: C. Exempt securities, because they are issued by a nonprofit religious, educational, or charitable organization
The Uniform Securities Act exempts securities issued by nonprofit religious, educational, charitable, fraternal, or similar organizations, regardless of whether they are offered to the general public.
Why the other options are wrong
- A. Incorrect; no separate notification filing is needed for this exemption.
- B. Incorrect; public offering does not remove this exemption.
- D. Incorrect; nonprofit organizations, not just governments, qualify.
Nonprofit Organization Exemption
Securities issued by nonprofit religious, educational, charitable, or fraternal organizations are exempt securities under the USA.
- Applies regardless of public offering
- No registration or notice filing required
- Antifraud provisions still apply
Memory trick: Charity gets a free registration pass.