For a licensing checkpoint quiz, treat the following as the opening fact pattern. Focus on what changes once the scenario is viewed through state law. A broker-dealer sells unregistered securities to a pension fund, an insurance company, and three high-net-worth individual investors in the same transaction. Which portion of this transaction is exempt under the institutional buyer exemption?

Why B — Only the sales to the pension fund and insurance company; the sales to the individual investors are not exempt under this provision

Under USA Section 402(b), the institutional buyer exemption applies to transactions with entities such as pension funds, insurance companies, and other financial institutions. High-net-worth individuals, regardless of wealth, are generally not classified as institutional buyers under this exemption. The sales to the three individuals would need to rely on a different exemption or registration. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.