An individual, solely representing an issuer, sells corporate bonds to institutional investors. These bonds are exempt securities under the Uniform Securities Act. In this scenario, is the individual required to register as an agent?
- ANo, because the individual only represents an issuer and the securities are exempt.
- BNo, because the bonds are exempt securities.
- CYes, because all individuals selling securities must register as agents.
- DYes, unless the transactions themselves are also exempt.
Show answer & explanationAnswer & explanation
Correct answer: D. Yes, unless the transactions themselves are also exempt.
An individual representing an issuer is excluded from the definition of an agent if they sell certain exempt securities OR if they engage in exempt transactions. The exemption for exempt securities only applies to specific types, not all exempt securities. Selling corporate bonds, even if they are exempt securities, requires agent registration unless the *transaction* itself is also exempt.
Why the other options are wrong
- A. While representing an issuer is a condition for some agent exclusions, the type of security and transaction are crucial. Corporate bonds, even if exempt, do not automatically grant an agent exclusion unless the transaction is also exempt.
- B. The fact that the bonds are exempt securities does not automatically exempt the individual selling them from agent registration when representing an issuer, unless the securities are specific types (e.g., U.S. government bonds) or the transaction is exempt.
- C. This is incorrect; there are specific exclusions from agent registration.
Issuer Agent Exclusion (Exempt Securities/Transactions)
An individual representing an issuer is excluded from the definition of an agent if they effect transactions only in specific exempt securities (e.g., U.S. government, municipal, Canadian government) OR if they effect certain exempt transactions (e.g., private placements, sales to institutional investors).
- Exclusion is for individuals representing an issuer, not a broker-dealer.
- Exempt securities exclusion is limited to specific types, not all 'exempt' securities.
- Exempt transaction exclusion applies to transactions like private placements or sales to institutions.
Memory trick: Issuer Reps Get Green Light for Exempts