Uniform Securities Agent State Law (Series 63) Practice Exam

What is the term for a primary-market transaction that requires registration?

1. Non-issuer transaction

2. Issuer transaction

3. Private transaction

4. Exempt transaction

The correct answer is: Issuer transaction

The term for a primary-market transaction that requires registration is an issuer transaction. In this context, an issuer transaction refers to the sale of securities directly from the issuer, which is typically the company looking to raise capital. Such transactions usually require the issuer to register the securities with the appropriate regulatory authority, ensuring that the necessary disclosures are made to potential investors. This process safeguards the interests of investors by providing them with important information regarding the investment. In contrast, non-issuer transactions typically involve the buying and selling of securities among investors without the involvement of the issuer, usually on the secondary market, which may not require the same level of registration. Private transactions often pertain to sales of securities that are exempt from registration due to the specific characteristics of the offering, such as offerings made to accredited investors only. Exempt transactions involve certain conditions under which securities can be sold without registration, primarily to facilitate capital formation while still aiming to protect investors. Understanding these distinctions is crucial for individuals working in the financial industry, as the regulatory implications can significantly affect how securities are offered and sold.