Series 63 practice questioneasyExempt Transactions — Institutional Buyers
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.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,051+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Regulation of Securities & Issuers questions
- Under the Uniform Securities Act, a private placement (limited offering) exemption generally requires that:
- A registered representative receives a call from a client who asks to purchase 500 shares of a thinly traded OTC stock…
- An issuer conducts a private placement under the USA limited offering exemption, selling to 8 individuals over a…
- An unsolicited brokerage transaction is exempt from state registration. Which condition must be met for this exemption…
- Offers and sales of preorganization certificates or subscriptions are exempt from state registration provided that:
- Under the Uniform Securities Act, an isolated non-issuer transaction is:
- A group of entrepreneurs collects preorganization subscriptions from 15 individuals for a new corporation. No payment…
- A charitable organization issues bonds to fund a new community center. The organization is a nonprofit with no part of…