Question

Identify some transaction exemptions granted under the Securities Act of 1933.

Answer 1

Answer) Transaction Exemptions granted under the Securities Act of 1933 :-

Four typical examples of transaction exemptions include :

1) Regulation A Offerings,

2) Regulation D Offerings,

3) Intrastate Offerings, and

4) Rule 144 Offerings.

1. Regulation A Offerings – Understanding What Qualifies

Regulation A offerings have a total value of securities offered at the $5 million threshold or less and are considered exempt. They are small market offerings and are not considered to be sizable players in the market at all.

Depending on the complete nature of the transaction, however, it may still be required to file a registration but with far less disclosure. Some types of securities that may be granted an exemption for their transactions include:

• Non-profit securities
• Financial institution securities
• Public utility securities
• Federal or foreign government-issued securities

2. Regulation D Offerings and Their Importance

Regulation D allows for exemptions on transaction filing. Shorter disclosure forms must be filed; however, and securities issued under Regulation D offerings cannot issue more than $5 million worth of securities within a one-year period.

Furthermore, no individual issuing the securities can have been convicted of securities fraud or any other relevant criminal offense.

3.Intrastate Offerings

A new issue of a security in a single state. An intrastate offering is not subject to SEC regulations, but is required to follow the applicable laws of the state in which it is registered. Some companies make intrastate offerings because doing so is less expensive than registering with the SEC. In order to qualify for an intrastate offering (and thereby escape SEC regulation), the offering may only be to residents of a single state, in which the company must have a significant presence.

4. Rule 144 Offerings – A Deeper Understanding

Under the SEC Act, public resale of some restricted securities can be done without any registration. It is generally with securities that are controlled and with requirements on minimum securities holding time and a specified volume that can be unregistered.

Rule 144 refers to the form number that must be filed with the SEC to complete exempt transactions. Transactions are no longer exempt if they exceed a sale price of $50,000 or have over 5,000 shares traded within a three-month period.

Furthermore, securities sold within a three-month period do not EXCEED -

1) weekly trading volume of the security in the previous four months,

2) weekly volume reported through transaction systems on an exchange like the NYSE, and

3) totaling 1% of outstanding shares.

The entire process must be carefully analyzed by legal professionals whenever such types of transactions are occurring to ensure proper compliance and legal accuracy is being upheld.