Series 63 practice questioneasyPrivate Placement—Commission Rules
Under the Uniform Securities Act, which of the following would cause a private placement transaction to lose its exemption?
- ANo commissions are paid for sales to institutional investors
- BCommissions are paid for sales to retail (non-institutional) investors✓ Correct answer
- CThe offering is limited to 10 non-institutional investors
- DThe offering is limited to institutional investors only
Explanation
Why B — Commissions are paid for sales to retail (non-institutional) investors
Paying commissions for sales to non-institutional investors removes the private placement exemption (USA 402(b)(9)). Only sales to institutional investors may involve commissions and retain the exemption.
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