Uniform Securities Agent State Law (Series 63) Practice Exam

What is a 'non-issuer' transaction?

1. A transaction involving only the issuer of the security

2. A transaction initiated by a third party not involved in the issuance

3. A direct sale where the issuer benefits financially

4. Any transaction that occurs on an international market

The correct answer is: A transaction initiated by a third party not involved in the issuance

A 'non-issuer' transaction refers specifically to a transaction involving a third party that is not the issuer of the security. This type of transaction typically occurs in the secondary market, where investors buy and sell securities among themselves, rather than acquiring them directly from the company that issued them. In this context, non-issuer transactions are significant because they do not involve the company or entity that created the security, which means the issuer does not receive any proceeds from the sale. This differentiates them from issuer transactions, where the proceeds go directly to the issuer, such as in an initial public offering or a direct offering. Understanding this distinction is important, especially in the realm of securities regulation, where non-issuer transactions may not be subject to the same level of scrutiny or regulatory requirements as those involving the issuer directly. This concept is foundational in securities law, affecting how transactions are conducted, reported, and regulated.