NASAA Series 63Regulation of Broker-Dealers and AgentsHard
An individual sells securities exclusively on behalf of an issuer in transactions that qualify as exempt transactions under the Uniform Securities Act, and receives no commission or other compensation directly or indirectly related to the sale of those securities. Which statement best describes this individual's status as an agent?
- AThe individual is excluded from the definition of agent because the sales involve exempt transactions and no sales-related compensation is paid
- BThe individual must still register as an agent because they sell securities for an issuer
- CThe individual must register as an agent only if the issuer itself is unregistered
- DThe individual is exempt only if the issuer is a financial institution such as a bank
Show answer & explanationAnswer & explanation
Correct answer: A. The individual is excluded from the definition of agent because the sales involve exempt transactions and no sales-related compensation is paid
The USA excludes from the definition of agent an individual who represents an issuer in effecting transactions exempted from registration (such as certain limited offerings) and who receives no commission or compensation directly related to those sales.
Why the other options are wrong
- B. This ignores the specific issuer-representative exclusion tied to exempt transactions and no sales compensation.
- C. Issuer registration status is not the determining factor for this exclusion.
- D. The exclusion is not limited to bank issuers; it applies broadly to issuer representatives meeting the criteria.
Issuer Representative Exclusion
An individual who represents an issuer solely in exempt transactions and receives no commission or compensation related to the sale is excluded from the definition of 'agent' under the USA.
- Requires both an exempt transaction and no sales-based compensation
- Common example: officer of issuer selling stock in a private placement without commission
- Losing either condition (compensation or exempt status) removes the exclusion
Memory trick: No commission, exempt transaction, no agent registration.