SIE Ready🚀 Securities Offerings · Lesson 3 of 6 · 4 min
Securities That Skip SEC Registration
🏛️ The U.S. Treasury borrows trillions without ever filing a registration statement with the SEC. Here is why.
💡 Key idea
Government, munis, bank, short-term commercial paper (≤270 days), non-profit and fixed insurance products are exempt. Antifraud rules still apply.
🧠 Why it matters
Some securities are EXEMPT from the '33 Act's registration requirement because of WHO issues them or WHAT they are. Main exempt securities: U.S. GOVERNMENT and agency-guaranteed securities; MUNICIPAL securities (states, cities, their agencies); securities issued or guaranteed by BANKS; COMMERCIAL PAPER and bankers' acceptances maturing in no more than NINE MONTHS (270 days) and used for current transactions; securities of NON-PROFIT religious, educational and charitable organizations; savings and loan securities; and insurance policies and FIXED annuities (variable annuities are NOT exempt). Exempt from registration does not mean exempt from antifraud rules: lying about any security is still illegal. Bank stock is exempt, but a bank HOLDING company's stock is not.
📈 In the real world
Rep Tomás gets a call from a customer who is surprised there is no SEC-registered prospectus for the city water revenue bonds she is buying. He explains municipal securities are exempt from '33 Act registration; instead she can read the official statement on the MSRB's EMMA site.
📌 Takeaways
- Exempt: U.S. government, munis, bank securities, commercial paper ≤ 270 days
- Also exempt: non-profit issues, fixed insurance and annuity contracts
- Exemption from registration never means exemption from antifraud rules
📖 Terms in this lesson
Exempt security: A security that does not register under the 1933 Act, such as Treasuries, municipal bonds and commercial paper maturing in 270 days or less.
✅ Test yourself
Commercial paper is exempt from registration under the Securities Act of 1933 if its maturity does not exceed:
- 90 days
- 180 days
- 270 days
- 365 days
Answer: C · 270 days
Section 3(a)(3) exempts notes for current transactions maturing in nine months or less, commonly stated as 270 days. 90 and 180 days are within the limit but not the limit; 365 days is too long.
Which of the following must be registered under the Securities Act of 1933?
- A bank's own common stock
- A variable annuity
- A Treasury note
- A city general obligation bond
Answer: B · A variable annuity
Variable annuities are securities that must be registered. Treasuries, municipal bonds and stock issued by a bank itself are exempt securities.
An exempt security is exempt from which of the following?
- Registration requirements
- State antifraud rules
- Antifraud provisions
- All federal securities laws
Answer: A · Registration requirements
Exempt securities skip registration, but the antifraud provisions still apply at both the federal and state level. No security is exempt from all securities laws.
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