A training manager asks you to analyze the following USA issue. The exam wants the best state-securities answer, not a practical business answer. A bank holding company that is not itself a bank issues common stock to raise capital. Is this security exempt from state registration?

AYes, because it is associated with a bank
BYes, because all financial institution securities are exempt
CNo, because the exemption applies to securities issued by banks, not bank holding companies✓ Correct answer
DNo, unless the holding company is listed on a national exchange

Explanation

Why C — No, because the exemption applies to securities issued by banks, not bank holding companies

Under USA Section 401, the exemption for bank-issued securities applies specifically to securities issued by banks, savings institutions, and trust companies, not to their parent holding companies. A bank holding company is a separate legal entity, and its securities must be registered unless another exemption applies, such as being listed on a national exchange. The extra setup is just noise; the controlling state-law rule stays the same.

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