Series 63 practice questioneasyExempt Transactions — Institutional Buyers
In a state-law practice set, a candidate reviews the following scenario. The key is the registration, exemption, or ethical rule doing the real work. Transactions with institutional buyers are exempt from state registration. Which of the following is considered an institutional buyer under the USA?
- AAny individual with a net worth exceeding $100,000
- BA bank, insurance company, or registered investment company✓ Correct answer
- CAny corporation with annual revenues exceeding $500,000
- DA sole proprietorship engaged in securities trading
Explanation
Why B — A bank, insurance company, or registered investment company
Under USA Section 402(b), transactions with institutional buyers such as banks, insurance companies, registered investment companies, pension funds, and other financial institutions are exempt from state registration. These entities are considered sophisticated enough to evaluate investments without the protections afforded by state registration. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.
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