Series 63 practice questionmediumFederal/State Coordination — Federal Covered Securities
In a state-law practice set, a candidate reviews the following scenario. Assume all filings and notices are evaluated under the USA. Which of the following is NOT considered a federal covered security under NSMIA?
- AA security listed on the NASDAQ Global Select Market
- BA security offered under SEC Rule 506 of Regulation D
- CA security sold in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933✓ Correct answer
- DA security issued by an investment company registered under the Investment Company Act of 1940
Explanation
Why C — A security sold in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933
Intrastate offerings under Section 3(a)(11) of the Securities Act of 1933 are not considered federal covered securities. These offerings are exempt from federal registration and are subject to state registration requirements. In contrast, exchange-listed securities, Regulation D Rule 506 offerings, and registered investment company securities are all classified as federal covered securities under NSMIA. The extra setup is just noise; the controlling state-law rule stays the same.
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