Series 65: Offers, Sales, And Other Transactions

Offers, Sales, and Other Transactions

One important distinction that typically shows up in some form in at least one question on the exam is the difference between an offer to buy or sell securities, an actual transaction, and other exchanges of securities that don’t constitute an offer or transaction.

A sale or purchase is an actual exchange of securities for some type of compensation or a contract to do one of these things in the future. In addition to the typical cash-for-securities exchange, the following can all constitute purchases and sales:

• • Trading securities for other securities
• • Trading securities for other types of assets
• • Trading securities for services
• • Exercising options
• • Making gifts of assessable securities

An offer is any attempt to invite another party to engage in a purchase or sale transaction, which includes advertisements for securities. As far as the exam is concerned, regulators are concerned with in which state an offer originates and which state it is directed to. Each of those states, if they are different, will require an issuer to either register or meet an exemption. In addition, these also determine which state administrator has jurisdiction over the transaction.

Five important examples to remember that are considered offers include:

• • A warrant or right to purchase a security at a set price in the future (warrants are often given as sweeteners on bond purchases)
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