Regulation of Securities and Issuers
Three registration routes
Notice filing applies to federal covered securities: the issuer files notice documents and fees, and the state cannot demand more. Coordination applies when the issuer is simultaneously registering with the SEC; the state filing becomes effective when the federal registration does. Qualification is the state-only route for offerings with no SEC registration; it requires a fuller filing and becomes effective by order of the Administrator after review.
Exempt securities vs. exempt transactions
Exempt securities include U.S. and municipal obligations, bank and savings institution securities, insurance company securities, nonprofit issues, and investment-grade commercial paper. Exempt transactions include isolated nonissuer trades, unsolicited brokerage orders executed for customers, private placements made to a limited number of offerees, and sales to institutions. Two ideas get tested constantly: an exemption from registration is never an exemption from the anti-fraud provisions, and an exempt security can still be sold in a transaction that is not exempt.
What registration means
The state does not approve, endorse, or vouch for the merits of a registered security. Registration means the filing requirements were met. A registration can be denied, suspended, or revoked, and the Administrator may issue a stop order.
Traps
Notes and promissory notes are presumed to be securities; do not assume a "loan" escapes state law. Secondary trading of already-registered securities is generally exempt. A security does not become exempt just because the issuer is a corporation or a familiar name.
Worked example: An issuer sells 12-month promissory notes to 30 in-state investors with no SEC registration and no state filing. The notes are securities; the offering is not an exempt transaction at that offeree count; both the issuer and its agents face registration violations plus anti-fraud exposure.