For a mock NASAA exam, assume the administrator is testing this exact point. Assume the administrator is testing the cleanest state-law answer. Securities issued by a religious, educational, or charitable organization that is organized as a nonprofit are:

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. This version tests the same concept with a different fact pattern wrapper.