Person - Correct Answer A "person" may issue securities or can trade securities.
- Individuals (human beings)
- Corporations (non-human persons!)
- Partnerships (including general partners who can contractually bind the partnership)
- Business Trusts
- Estates
- Trusts (where the in...
Series 63 - Registration and Licensing (ANSWERED)
Person - Correct Answer A "person" may issue securities or can trade securities.
- Individuals (human beings)
- Corporations (non-human persons!)
- Partnerships (including general partners who can contractually bind the partnership)
- Business Trusts
- Estates
- Trusts (where the interests of the beneficiaries of the Trust are evidenced by a
security)
- Associations
- Joint Stock Companies or Joint Ventures
- Governments and Political Subdivisions of Governments (for example, a township is a
political subdivision)
- Unincorporated Organizations and any other legal or commercial entit
Issuer - Correct Answer An "issuer" is any person (see previous definition) who issues
or proposes to issue a security. For example, if ACME Corporation sells, or proposes to
sell a new issue of bonds, it is considered to be an "issuer" under the Act.
"Issuer" for Trusts - Correct Answer For securities where the structure is such that
there is no Board of Directors (these include Collateral Trust Certificates, Voting Trust
Certificates, Certificates of Deposit for a Security, and Unit Investment Trusts), the
"issuer" is defined as the person performing the functions of manager or depositor
under the Trust agreement.
"Issuer" for Equipment Trusts - Correct Answer For Equipment Trust Certificates, the
issuer is the person to whom the equipment is to be leased or conditionally sold - which
is the corporation. (In an equipment trust, the trustee holds the title to the equipment
until the loan is fully repaid - similar to a bank holding the title when an automobile is
purchased with a car loan. In effect, the trustee "leases" the equipment to the
corporation. When the corporation completes all payments, the title reverts to the
issuer).
No Issuer for Fractional Interest in Oil and Gas Programs - Correct Answer For
Fractional Interests in Oil and Gas Programs, or Mining Titles or Leases, there is not
considered to be any "issuer."
Issuer transaction - Correct Answer When an "issuer" sells or redeems securities, this
is termed an "issuer transaction." In an "issuer transaction," the sale of the securities is
for the benefit of the issuer - the issuer receives the proceeds from the sale.
Primary transaction - Correct Answer An "issuer transaction" that involves a sale of
securities is also known as a "primary transaction," since it takes place in the primary or
new issue market.
, Non-Issuer - Correct Answer A "non-issuer" is simply a person who is not defined as
an issuer under the Act. The legal definition of a "non-issuer" transaction under the Act
is a transaction not directly or indirectly for the benefit of the issuer.
Non-issuer transaction - Correct Answer In a "non-issuer transaction," the proceeds
from the sale of the securities go to someone other than the issuer
Secondary transaction - Correct Answer Non-issuer transactions are also known as
"secondary transactions," since they take place in the secondary or trading market.
Institutional Buyer Rule - Correct Answer Firms with no office in the state that only deal
with institutions are not required to register
Definitional of Institutional Buyer - Correct Answer Banks;
Savings and Loans;
Trust Companies;
Insurance Companies;
Investment Companies;
Pension and Profit Sharing Plans; and
Anyone Else So Designated By The State Administrator.
Broker Dealer - Correct Answer a person who:
Engages in the business of effecting securities transactions for the account of others; or
Engages in the business of trading for his own account (known as "proprietary trading").
Principal and Agency - Correct Answer When a firm trades out of its own account, it is
acting in a "principal" capacity in the transaction.
When a firm effects trades for the account of others, it is a middleman in the transaction
and is acting in an "agency" capacity.
Not considered to be a Broker/Dealer - Correct Answer Agents, Depository Institutions,
Issuers
Excluded from Definition of a Broker / Dealer - Correct Answer - Firms that trade
exclusively with professional investors with no place of business in the state
- Firms that contact EXISTING customers on vacation in another state
Exemption from Broker/Dealer Rule - Correct Answer Canadian B/D are exempt for
existing customers who are temporarily vacationing in the U.S. (Does not apply for folks
who stay an entire season in the US)
Definition of an Agent - Correct Answer An agent is an individual (a human) who
represents a broker dealer or an issuer in effecting securities transactions.
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