Series 63 practice questioneasyPrivate Placement Exemptions
Under the Uniform Securities Act, which of the following transactions would MOST likely be considered an exempt private placement?
- AAn offer to sell securities to 10 retail clients and 20 institutional investors in the state, with no commissions paid for sales to non-institutional buyers.✓ Correct answer
- BAn offer to an unlimited number of retail clients, with commissions paid to agents for all sales.
- CA general advertising campaign for a new private placement to any member of the public.
- DAn offer to 25 retail clients, all of whom purchase securities, without any restriction on resale.
Explanation
Why A — An offer to sell securities to 10 retail clients and 20 institutional investors in the state, with no commissions paid for sales to non-institutional buyers.
Choice A describes a private placement exempt under USA Section 402(b)(9), as offers do not exceed 10 non-institutional investors, and no commission is paid for these sales. The other options either exceed the retail investor limit, involve general solicitation, or lack resale restrictions, which would invalidate the exemption.
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