Registration Statement

Hollingbourne Cider registers 300,000 shares in State B and the registration statement becomes effective. Wendell Crake, who holds no registration of any kind, begins telephoning State B residents on the company behalf, describing the shares and taking subscriptions for a commission. He says the registration of the shares covers him. Under the Uniform Securities Act, Crake is:

1. A.exempt from agent registration because he represents the issuer rather than a broker-dealerRepresenting an issuer creates agent status unless a specific exclusion applies, and none does for a commissioned public sale of registered shares.
2. B.required to register as an agent, because registration of the security does not register the person selling itCorrect. Security registration and person registration are independent requirements under the Act.
3. C.properly covered by the effective registration statement, which extends to everyone selling the registered sharesA registration statement covers securities, not sellers.
4. D.exempt because the shares are registered, which makes every sale of them an exempt transactionRegistration of a security does not convert its sales into exempt transactions.

Why: Registering a security clears the security for offer and sale in the state. It says nothing about the people who sell it. An individual representing an issuer in effecting sales of non-exempt securities in a non-exempt transaction is an agent and must be registered in his own right. The two registration requirements are independent, and satisfying one never satisfies the other.

Kesterly Materials completed a securities registration in State N that became effective on May 12. No amendment is filed, no stop order is entered, and the underwriter completes the distribution promptly. Under the Uniform Securities Act, the registration statement remains effective until:

1. A.One year from its effective dateCorrect. A securities registration statement under the Act is effective for one year from the date it became effective.
2. B.December 31 of the year in which it became effectiveThis is the annual expiration for persons such as broker-dealers and agents, not for a securities registration.
3. C.Ninety days from its effective dateThere is no ninety-day expiration for an effective securities registration under the Act.
4. D.Indefinitely, unless the Administrator revokes itRegistration statements expire on their own terms. Revocation is a separate remedy, not the only way effectiveness ends.

Why: Under the Uniform Securities Act a securities registration statement is effective for one year from its effective date, so Kesterly's runs until the following May 12. Registration statements for securities are dated from effectiveness; they do not follow the calendar-year cycle that governs the registrations of broker-dealers, agents, investment advisers, and investment adviser representatives.

Ravelston Dynamics is registering an offering in State S by coordination, having already filed a registration statement with the SEC under the Securities Act of 1933. Its counsel assembles the state filing. Beyond the federal prospectus and a consent to service of process, which of the following does the Uniform Securities Act contemplate being filed with the Administrator?

1. A.A written opinion of the Administrator's staff approving the offering's terms before the filing is acceptedThe Administrator never approves an offering, and no pre-filing opinion exists in this process.
2. B.Audited financial statements for the issuer's last five fiscal years and a list of every shareholder of recordNeither a five-year audited series nor a shareholder list is what the coordination filing calls for.
3. C.Nothing further, because coordination means the state accepts the federal filing package in place of any state documentsCoordination synchronises effectiveness and reuses the federal disclosure. It does not reduce the filing to the prospectus alone.
4. D.The articles of incorporation and bylaws, any underwriting agreement, any governing indenture, and a specimen of the securityCorrect. These are the supporting documents the coordination filing contemplates alongside the federal prospectus.

Why: Coordination is built on the federal filing, but the state filing is not limited to the prospectus. The Act contemplates that the registrant file the prospectus filed under the Securities Act of 1933, together with copies of the articles of incorporation and bylaws or their substantial equivalent, a copy of any agreement with or among underwriters, a copy of any indenture governing the issue, and a specimen or copy of the security itself, along with a consent to service of process. The Administrator may also require the filing of any amendment to the federal prospectus.

Kilverstone Grange Ltd. is preparing a registration statement for the State N Administrator. Its chief financial officer has drafted the financial statements and the description of the business, and believes that is the whole of it. Counsel points out that the Act requires the registration statement to specify certain further matters, among them the amount of securities to be offered in State N, the other states in which the same offering is proposed to be made, and any adverse order, judgment or decree entered in connection with the offering by a court or by a state or federal securities regulator. Why does the Act require the last two of those items?

1. A.Because the Administrator must approve the offering in every other state before it may become effective in State N.No Administrator approves an offering in other states, and effectiveness in State N does not depend on other states' action.
2. B.Because the filing fee is calculated by dividing the offering equally among all states in which it is made.The fee is based on the securities proposed to be offered in the state, not apportioned across other jurisdictions.
3. C.Because they show the Administrator the offering's full reach and whether any other court or regulator has already acted adversely on it.Correct. Both items disclose the scale and the regulatory history of the offering itself, which a purely local presentation would hide.
4. D.Because an adverse order entered in another state automatically bars registration in State N.Disclosure is required so the Administrator can evaluate the matter. An adverse order elsewhere is significant but not an automatic bar.

Why: These requirements let the Administrator see the offering whole rather than through a State N keyhole. Knowing the other states in which the same offering is being made tells the Administrator how large the overall distribution is and which of her counterparts are simultaneously reviewing it, which supports coordination between regulators and flags an issuer shopping for the easiest jurisdiction. Disclosure of any adverse order, judgment or decree entered in connection with the offering is even more direct: if another state or a court has already found something wrong with this very offering, that bears immediately on whether it should be sold to State N residents. Both items are about the offering's history and reach, which a purely local financial presentation would conceal.