Uniform Securities Agent State Law (Series 63) Practice Exam

Who is typically considered the "issuer" of a security?

1. The underwriter

2. The stockholder

3. The corporation issuing the security

4. The broker-dealer

The correct answer is: The corporation issuing the security

The issuer of a security refers to the entity that creates and offers the security for sale. Typically, this is the corporation or organization that is raising capital through the issuance of stocks, bonds, or other financial instruments. When a corporation issues securities, it is seeking to attract investment from investors, which can be used for various purposes such as expansion, development, or operational funding. In this context, a corporation issues securities to the public or to specific investors, making it the primary party involved in the transaction. This relationship is foundational to the functioning of capital markets, where the issuer is responsible for meeting the regulatory obligations associated with the issuance, including disclosures related to the financial health and operational status of the company. The other choices, such as underwriters, stockholders, and broker-dealers, play different roles in the process. Underwriters help facilitate the sale of the security to the public but do not create the security themselves. Stockholders are the investors who buy and hold the securities issued, while broker-dealers act as intermediaries in the buying and selling process. They do not issue securities but rather assist in the transaction. Therefore, the corporation issuing the security is accurately recognized as the issuer in this scenario.