What Is the Uniform Securities Act?The Uniform Securities Act is a model law created as a starting point for state-level securities regulation. The purpose of the Uniform Securities Act is to deal with securities fraud at the state level and to assist the Securities and Exchange Commission (SEC) in enforcement and regulation. Show
Uniform Securities Act ExplainedBecause not all investments are covered federally and not all investment dealers are registered at the federal level, the SEC cannot protect all investors and pursue all security violations. This created the need for state-level regulations such as the Uniform Securities Act to further protect investors. Each state has its own security laws colloquially referred to as the “blue sky laws.” How the Uniform Securities Act Is AppliedThe Uniform Securities Act is a framework that guides states in the crafting of their own securities legislation. The act evolved through a series of amendments due to earlier regulations not being adopting consistently across the country. Some jurisdictions did not enact each securities act introduced by the Uniform Law Commissioners. Through subsequent revisions and replacements of prior regulations, the Uniform Securities Act brought more parity to the federal and state implementation of securities protections. One of the issues with regulating securities from two different levels of government is the potential for duplication. The Uniform Securities Act outlines the authority and role of state and federal regulators in dealing with securities fraud. For example, many fraudulent acts occur at the local level with pyramid schemes and other scams. That means enforcement through state law is necessary to address such crimes. The act provides more structure and consistency in enforcement authority across states as well as in coordination with federal authority regarding the prosecution of securities fraud. The intent of securities regulations, whether at the state or federal levels, is to prevent the fraudulent sale of securities to investors. Regulatory efforts stem from three primary elements. Registration is required for initial public offerings. Those who deal in securities, specifically investment advisers, broker-dealers, and their representatives and agents, must also be registered. In order to prohibit and prevent securities fraud, regulatory agencies must also have enforcement authority to address such actions. That includes being granted the ability to establish regulations and rules on securities transactions and having the capacity to bring the prosecution of criminal and civil violations to court. The Uniform Securities Act serves as structure that includes state-level authority to take action on these issues. I. Fraudulent and other prohibited practices A. Sales and purchases-Section 101 Liability for violations B. Advisory activities Investment advisory contracts-Section 102(c) 1. Fraudulent Advice-Section 102(a) II. Registration of investment advisers, investment adviser representatives, A. Registration requirements 1. Broker dealers and agents-Section 201(a) Exemptions due to nature of clients 3. Expiration of registration-Section 201(e) 4. Limited registration of Canadian broker-dealers and agents-Section 201-A B. Registration and notice filing procedure Application and effective date-Section 202(a) C. Post-registration provisions Books and accounts-Section 203(a) D. Denial, revocation, suspension, cancellation and withdrawal of registration 1. Grounds-Section 204(a) III. Registration and notice filing procedures for securities A. Registration requirement-Section 301 B. Registration by filing Applicability-Section 302(a) C. Registration by coordination Applicability-Section 303(a) Content of registration statement-Section 303(b) D. Registration by qualification Applicability-Section 304(a) E. General registration provisions Persons who may file-Section 305(a) F. Denial, suspension and revocation of registration Grounds-Section 306(a) G. Federal covered securities Filings of Securities Act of 1933 documents-Section 307(a) IV. General provisions A. Definitions 1. Fraud-Section 401(d) Definition Banks 3. Investment adviser representatives-Section 401(g) Definition 6. Broker-dealer-Section 401(c) Definition Agent 7. Agent-Section 401(b) B. Exemptions from registration 1. Exempted securities-Section 402(a) American governments 2. Exempted transactions-Section 402(b) Isolated non-issuer transactions 3. Denial and revocation of exemptions-Section 402(c) C. Filing of sales and advertising literature-Section 403 D. Misleading filings-Section 404 E. Unlawful representations concerning registration, exemption or notice filing-Section 405 No official approval F. Administration of Act-Section 406 Designation of administrator G. Investigations and subpoenas-Section 407 Investigations H. Prohibitory orders and injunctions-Section 408 I. Criminal penalties-Section 409 Penalties prescribed J. Civil liabilities-Section 410 Violation of registration or fraud provisions K. Judicial review of orders-Section 411 Procedures L. Rules, forms, orders and hearings-Section 412 Standards for adoption M. Administrative files and opinions-Section 413 When filing occurs N. Scope of the Act and service of process-Section 414 Sellers O. Statutory policy-Section 415 P. Short title-Section 416 Q. Severability of provisions-Section 417 R. Repeal and saving provision-Section 418 What is not a security under the Uniform Securities Act?Commodities such as gold, silver, wheat, and pork bellies are not securities. Options to purchase or sell commodity futures, options on stocks, and stocks are securities. Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security for sale to the public.
Which of the following securities is are exempt under the Uniform Securities Act?Securities issued by insurance companies, and Canadian municipal securities are exempt from registration under the USA. Any security that represents an interest in, or debt of, or is guaranteed by an insurance company organized under the laws of any state and authorized to business in this state is exempt.
Which of the following is not subject to the registration requirements of the Securities Act of 1933?Foreign Currency Contracts; Foreign currency contracts are not securities, and hence are not subject to the 1933 Act (though foreign currency option contracts traded on the Philadelphia Stock Exchange are subject to the Act).
Which of the following securities are exempt from registration?The Uniform Securities Act (USA) explicitly names the following as securities exempt from state registration: US government securities. Canadian government securities. National foreign government securities.
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Which security is not subject to registration under the Uniform Securities Act?
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