The National Securities Market Improvement Act of 1996 provided federally covered exemptions for securities that have met the stringent listing requirements of any U.S. stock exchange, including the Nasdaq. An issuer whose common stock is listed on a centralized U.S. stock exchange such as the NYSE or the Nasdaq is provided an exemption for all of its securities, regardless of their type. An exemption from state registration is also provided to:

• Securities that are sold exclusively to qualified purchasers.

• Investment company securities.

• Securities and transactions exempt from federal registration.

• Debt securities with maturities of less than 270 days and sold in denominations of $50,000 or more.

• Exempt issuers.

• Employee benefit plans.

• Option contracts, both puts and calls on stocks and indexes.

• Equipment trust securities issued by a federally covered or exempt issuer.

Certain securities are exempt from state registration and sales literature requirements because the issuer is exempt. The following are examples of exempt issuers:

• U.S. government.

• State and municipal governments.

• Foreign national governments.

• Canadian federal and municipal governments.

• Insurance companies.

• Banks and trusts.

• Credit unions and savings and loans.

• Common carriers (railroad, trucking, and airlines) that are subject to the Interstate Commerce Commission (the term consolidated is a key word).

• Religious and charitable organizations.

• Public utility securities.

• Securities issued by a cooperative.


Sometimes a security that would otherwise have to register is exempt from state registration because of the type of transaction that is involved. The way in which the securities are sold removes the securities from the jurisdiction of the administrator. The following are all exempt transactions:

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