Are commodity futures contracts a security?
NO
BUT options on them ARE a security
What determines if an annuity or insurance policy is a security?
Fixed: is not a security
Variable: is a security
Common items which are NOT a security?
List 4
- IRAs or Keith plans
- currencies
- collectibles
- condos as private residences
What are Federal Covered Securities?
List 4
Securities exempt from state registration including:
- National Exchange listed
- sold to qualified purchasers
- investment company securities (mutual funds)
- Reg D 506
In context of Federal Covered Securities, what’s a Qualified Purchaser?
As defined under Investment Company Act of 1940 - assets of $5m or more.
(Securities sold to Qualified Purchasers are Federally Covered)
Aside from Federal Covered Securities, what are Exempt Securities?
List 5
- Government (all levels, Canada levels, foreign govt)
- Securities issued by banks, federal credit unions, insurance companies, trust companies
- Common carriers and utilities
- Nonprofits
- Commercial paper
What’s Covered by Reg D 506 (and thereby Federally Covered)?
Private placement sold to no more than 35 non-accredited investors who have net worth of $1m or income of $200k for each of last two years
Which Federally Covered Securities must Notice File?
Investment Company securities and Reg D 506 securities
Consent to Service of Process, fee, filing copies of SEC filed materials
What’s the registration status of most secondary market trades?
If in an exchange, generally registered at federal level and so are an exempt transaction for state level
Principal types of Exempt Transactions:
List 6
- most non-issuer transactions esp if isolated or of listed stock
- Unsolicited non-issuer transactions
- issuer to underwriter transactions
- sale or offer to institutional investor
- transactions by a fiduciary
- private placement to <10 retail investors
If no registration exemption available, what are types of registration?
- Registration by Notification (Filing) - hardly used as available to well established corporations and most Federally Covered
- Registration by Coordination - doesn’t require response as effective when federal registration is
- Registration by QUALIFICATION - requires extensive info and response
What’s not an offer or sale of a security?
List 3
- Bona fide pledge or loan of stock
- Exchange of securities due to merger, reorganisation or bankruptcy
- Stock dividend provided nothing of value is given in return
What does filing of a new issue with Administrator require?
Number of shares
Articles
Financials
NB - Not tax ID number
Under USA what does guaranteed mean in relation to a security?
Payment of dividends, interest and principal are guaranteed (e.g. a Treasury)
Must stock listed on a foreign exchange file a registration statement with state Administrator?
Generally yes, but an exemption exists for stock listed on TSX and TSX Venture Exchange
What do subaccounts in an insurance policy indicate?
Choosing investment options to vary rate of return – therefore a SECURITY
Is a REIT a security?
Always
Who has burden of proof for establishing that a security is exempt?
The person claiming the exemption
