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← Series 63: Regulation of Securities & Issuers
Series 63 practice questionmediumSecurities Registration — Notification/Filing

For a licensing checkpoint quiz, treat the following as the opening fact pattern. Treat the facts as a straight Series 63 application question. An issuer registering securities by notification must meet several requirements. Which of the following would DISQUALIFY an issuer from using this method?

  1. AThe issuer has been subject to a stop order or injunction within the past five years involving the registration or sale of securities✓ Correct answer
  2. BThe issuer has paid dividends in each of the last three fiscal years
  3. CThe issuer is listed on a national securities exchange
  4. DThe issuer's securities are being underwritten on a firm commitment basis
Explanation

Why A — The issuer has been subject to a stop order or injunction within the past five years involving the registration or sale of securities

Under USA Section 302, registration by notification is reserved for issuers with a clean regulatory record and proven financial stability. An issuer that has been subject to a stop order or injunction regarding the registration or sale of securities within the past five years would be disqualified, as this indicates regulatory concerns about the issuer's past conduct. The exam trick is the framing, not the underlying Uniform Securities Act rule.

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