NASAA Series 63Regulation of Broker-Dealers and AgentsMedium
An individual, solely representing an issuer, sells that issuer's securities to the general public through a public offering. The issuer is engaged in manufacturing and has no other business activities. Under the Uniform Securities Act, how would this individual most likely be classified?
- AExempt from registration as an agent because they represent an issuer.
- BExempt from registration as an agent because they are selling for just one issuer.
- CRequired to register as a broker-dealer due to direct public sales.
- DRequired to register as an agent because they are selling to the public.
Show answer & explanationAnswer & explanation
Correct answer: D. Required to register as an agent because they are selling to the public.
Individuals representing issuers are generally excluded from the definition of an agent if they sell exempt securities or engage in exempt transactions. However, selling an issuer's non-exempt securities to the general public in a public offering does not qualify for an exclusion, requiring agent registration.
Why the other options are wrong
- A. The exclusion for representing an issuer applies only under specific circumstances, such as selling exempt securities or in exempt transactions.
- B. The number of issuers represented is not the primary factor; the nature of the securities and transactions determines the need for registration.
- C. An individual representing an issuer is typically an agent, not a broker-dealer, unless they are independently engaged in the business of effecting securities transactions for others.
Issuer Agent Registration
An individual representing an issuer in the sale of its securities must register as an agent unless an exclusion applies, such as selling only exempt securities or engaging in exempt transactions.
- Individuals representing issuers are generally defined as agents.
- Exclusions exist for sales of exempt securities or in exempt transactions.
- Public offerings of non-exempt securities typically require agent registration.
Memory trick: An individual acting for an issuer selling securities is an agent, unless a specific exemption 'shields' them.