Series 63 practice questionmediumExempt Transactions — Isolated Non-Issuer Transactions
During a registration workshop, the instructor adds this setup first. Focus on what changes once the scenario is viewed through state law. Mary sells shares she owns in a private company to her neighbor in a one-time transaction. Mary is not an issuer, underwriter, or dealer. This transaction is BEST described as:
- AA transaction requiring state registration
- BAn isolated non-issuer transaction, exempt from registration✓ Correct answer
- CA private placement requiring compliance with Regulation D
- DAn unsolicited brokerage transaction
Explanation
Why B — An isolated non-issuer transaction, exempt from registration
Under USA Section 402(b), an isolated non-issuer transaction is exempt from registration. Mary's one-time sale of her own shares to her neighbor meets all the criteria: it is isolated (not part of repeated transactions), and Mary is not the issuer, an underwriter, or a dealer. No registration is required for this occasional secondary market transaction. State-law analysis leads to the same conclusion despite the alternate scenario.
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