Exempt Securities & Administrator Revocation Powers
Details exempt securities (U.S. govts, munis, Canadian govts, banks, commercial paper) and the strict limits on the Administrator's revocation authority.
- Exempt securities include U.S. government debt, municipal bonds, Canadian federal/provincial debt, bank securities, and 9-month commercial paper ($50k+).
- Securities issued by banks are exempt; securities issued by bank holding companies are NOT exempt under the bank exemption.
- The Administrator can revoke only TWO securities exemptions: (1) Non-profit/religious securities, and (2) Employee benefit plan securities. U.S. govts can NEVER be revoked.
Section 402(a) of the Uniform Securities Act lists securities that are exempt from state registration and advertising filing requirements based on issuer creditworthiness or government oversight.
Key exempt securities include: (1) U.S. government and agency securities, (2) Municipal bonds issued by any state, city, or political subdivision, (3) Canadian federal government, provincial, and Canadian municipal obligations, (4) Debt of foreign national governments with which the U.S. maintains diplomatic relations, (5) Securities issued by banks, savings institutions, and trust companies (but NOT bank holding companies), (6) Securities issued by non-profit religious, charitable, or educational organizations, and (7) Commercial paper maturing in 9 months or less, issued in denominations of at least $50,000, and rated in one of the top 3 rating tiers.
Under Section 402(c), the Administrator has summary power to revoke exemptions for exempt transactions, but over EXEMPT SECURITIES, the Administrator's revocation authority is strictly limited to non-profit securities and employee benefit plan securities. The Administrator can NEVER revoke exemptions for U.S. government, municipal, or bank debt.
- Foreign political subdivision debt (e.g. City of Paris) is NOT exempt; only Canadian political subdivisions qualify for the exemption.
- Commercial paper with a maturity exceeding 9 months (270 days) loses its exemption and must be registered.
Under Section 402(c) of the Uniform Securities Act, the state Administrator has the statutory power to revoke or deny certain exemption provisions. Regarding exempt securities, which exemption can the Administrator legally revoke, and which can the Administrator NEVER revoke?