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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardAgent exclusion—issuer representatives in exempt transactions

An employee of ABC Corp. sells the company's registered stock to the company's employees in a private, nonpublic offering under Rule 506 of Regulation D. Under the USA, is this employee considered an agent?

  1. ANo, because the employee is representing the issuer in an exempt transaction.✓ Correct answer
  2. BYes, because the securities are not exempt.
  3. CYes, because they are selling to employees.
  4. DNo, only if the offering is registered with the SEC.
Explanation

Why A — No, because the employee is representing the issuer in an exempt transaction.

Employees representing issuers in exempt transactions (such as private placements under Reg D/Rule 506) are not considered agents under the USA (USA Sec. 401(b)). Registration status with the SEC is irrelevant for this exclusion.

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