- Requires that investors receive financial and other significant information concerning securities being offered for public sale;
- Prohibit deceit, misrepresentations, and other fraud in the sale of securities.
To achieve these goals, securities must be registered before they can be sold to the public. The registration process requires that issuers provide potential investors with essential facts about the investment, including:
- A description of the company’s properties and business;
- A description of the security to be offered for sale;
- Information about the management of the company;
- Financial statements certified by independent accountants
With such information investors, not the government, can make informed judgments about whether to purchase the securities. While the SEC requires that the information provided be accurate, it does not guarantee it.
Not all securities, however, must be registered before they can be sold to the public. These include:
- Certain exempt securities (such as US government securities, municipal securities, short-term corporate debt, and commercial bank securities)
- Securities that are sold in an exempt transaction (such as those sold in a private placement (Reg D), offerings of limited size (Reg A), and intrastate offerings (Rule 147)
Remember the basic provision of the Act of 1933 – all securities must be registered to be lawfully sold to the public unless:
- The security is exempt;
- The transaction is exempt.
This framework will help guide candidates through the analysis of whether a security must be registered. From here, candidates can recall and analyze the lists of exempt securities and transactions to make such a determination. And remember, if either the security or transaction is exempt it means the SECURITY can lawfully sold without be registered.
Series 7, Series 24, Series 63, Series 65, Series 66, Series 79