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Series 63 practice questioneasyExempt Securities — Nonprofit Securities

For a mock NASAA exam, assume the administrator is testing this exact point. Treat the facts as a straight Series 63 application question. Securities issued by a religious, educational, or charitable organization that is organized as a nonprofit are:

  1. AAlways required to register with the state Administrator
  2. BExempt from state registration under the USA✓ Correct answer
  3. COnly exempt if they are also registered with the SEC
  4. DRequired to file by qualification in every state
Explanation

Why B — Exempt from state registration under the USA

Under USA Section 401, securities issued by nonprofit organizations organized for religious, educational, benevolent, charitable, fraternal, or social purposes are exempt from state registration. The exemption applies provided the organization does not operate for pecuniary profit and no part of the net earnings inures to the benefit of any private shareholder. The governing USA principle is unchanged even though the framing is different.

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