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Exemptions from the SEC Act of 1933

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

Historical Definition

The SEC Act was landmark legislation that established the SEC and gives it authority over proxy solicitation and registration of organized stock exchanges. In addition, the Act sets disclosure requirements for securities in the secondary market, regulates insider trading, and gives the Federal Reserve authority over credit purchases of securities. When established, the Act reflected an effort to extend and overcome shortcomings of the Securities Act of 1933. These two pieces of legislation are the basis of securities regulation in the twentieth century.

Exemptions

Today, there are many securities which are exempt from the Securities Exchange Commission [SAC] Act of 1933, its’ registration and resuting prospectus requirements.

They include the following securities and types:

• US Government and Federal Agency issues.
• Municipal, State issues and commercial paper with a maturity not in excess of 270 days.
• Intra-state offerings (Rule 147) because they are blue-sky chartered within the state.
• Small Public offerings (Regulation A) if the value of the securities issued does not exceed $5,000,000 in any 12 month period. An issuer using the Regulation A exemption does not make the normal filings with the SEC in Washington. Instead, they file a simplified disclosure document with their SEC Regional Office, known as an Offering Statement. It must be file at least 10 business days prior to the initial offering of the securities.  No securities may be sold unless issuer has furnished an offering circular (full disclosure document) to the purchaser at least 48 hours prior to the mailing of confirmation of the sale, and, if not completed within 9 months from the date of the offering circular, a revised circular must be filed. Every 6 months, issuers must file a report with the SEC of sales made under the Regulation A exemption until offering is completed.
• Traditional insurance policies are considered to be securities and are exempt, as are fixed annuities. However, some of the newer forms of life insurance, like variable life, as well as variable annuities, have investment characteristics and, therefore are not exempt from registration.
• Commercial paper and banker’s acceptances (9 month or shorter maturity), since they are money market instruments.

Assessment

What did we miss?

Here is a guide to help understand how to raise capital and comply with federal securities laws.

Link: http://www.sec.gov/info/smallbus/qasbsec.htm

Conclusion

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Filed under: Experts Invited, Glossary Terms, Investing | Tagged: exempt securities, SEC, SEC Act 1933, Securities Exchange Commission | Leave a comment »