Exempt Transaction

A private placement under the USA is generally:

1. A.Always prohibitedThis reads a limited offering as illicit. Private placements are a recognized way to raise capital; the restrictions on how many are approached and on general advertising are conditions of the exemption, not evidence of wrongdoing.
2. B.A registered public offeringThis is the direct contradiction of the term. The exemption exists so the offering need not be registered, and a private placement is defined by the absence of the broad public distribution a registered offering involves.
3. C.An exempt securityThe closest answer, and right about the outcome: no registration is required. It picks the wrong track, though. The relief attaches to the manner of the offering rather than to the instrument, and the very same security offered to the public at large would need to be registered.
4. D.An exempt transactionCorrect - limited offerings are exempt transactions.

Why: A private placement (limited offering) is an exempt transaction.

An unsolicited transaction initiated by the customer is:

1. A.Always prohibitedThis reverses the treatment. Customer-initiated orders get relief precisely because nobody solicited the customer, so there was no sales pressure for the registration requirement to guard against.
2. B.An exempt transactionCorrect - unsolicited orders are exempt.
3. C.A registered offeringA registered offering is a distribution that cleared registration before it began. What the stem describes is one customer's own order, which reaches the same result by a different route: exempt rather than registered.
4. D.FraudNothing deceptive took place. The customer picked the security unprompted, so there was no statement made to induce the purchase and nothing withheld that would have changed the decision.

Why: Unsolicited (customer-initiated) transactions are exempt transactions under the USA.

Which individual is EXCLUDED from the definition of agent under the USA?

1. A.An investment adviser representativeThis is a real category, but a parallel one rather than an exclusion. An investment adviser representative has a separate registration of their own, and holding it does not lift a person out of the agent definition when they act in that capacity.
2. B.Any securities salespersonThis states the definition rather than an exclusion from it. Someone selling securities on behalf of a broker-dealer is the paradigm case of an agent, which is the opposite of what the question asks for.
3. C.One who represents an issuer in an exempt transactionCorrect - exempt-transaction issuer reps are excluded.
4. D.A branch managerA supervisory title changes nothing. Anyone who represents a broker-dealer in effecting securities transactions falls inside the definition regardless of what the firm calls the position.

Why: A person representing an issuer in certain exempt transactions is excluded from the agent definition.

An agent solicits a customer to buy a non-exempt security that is not registered in the state. This is:

1. A.Required by the USAThe Act forbids precisely this conduct. The answer takes a prohibition and restates it as a mandate, which is the reverse of what the provision does.
2. B.Always allowedThis ignores both halves of the analysis. The security carries no exemption of its own, and the sale was solicited rather than customer-initiated, so neither the security track nor the transaction track offers any relief.
3. C.Fine if the client is wealthyWealth does figure into some exemption tests, which gives this a foothold. A customer's means never register a security, though, and the stem describes an ordinary solicited sale rather than the kind of limited offering where investor status could matter.
4. D.ProhibitedCorrect - it must be registered or exempt.

Why: Selling an unregistered, non-exempt security in a non-exempt transaction is prohibited.