Uniform Securities Agent State Law (Series 63) Practice Exam

What is a characteristic of a non-exempt security?

1. It can be sold without registration

2. It must be registered in every state where sold

3. It is not subject to any regulations

4. It is always a government bond

The correct answer is: It must be registered in every state where sold

A characteristic of a non-exempt security is that it must be registered in every state where sold. This requirement arises from the fact that non-exempt securities are subject to state regulations and must comply with the registration and filing requirements of the jurisdictions in which they are offered for sale. This ensures that investors have access to important information regarding the security and its issuer before making investment decisions. Non-exempt securities are typically those that do not meet specific criteria or exemptions outlined by state or federal laws, meaning they cannot be sold without providing adequate disclosure through registration. This is in contrast to exempt securities, which may not require such registration or are otherwise exempt from these regulations. While it is accurate to say that some specific government or municipal bonds may qualify as exempt securities, this does not apply universally to all non-exempt securities, reinforcing the need for registration in applicable states.