Is it legal to sell unregistered securities on a national exchange?

Is it legal to sell unregistered securities on a national exchange?

• A. True
• B. False
• C. Depends on the state
• D. Only with special permission

Answer: (B)

Selling unregistered securities on a national exchange is generally considered illegal because the securities laws, specifically those established by the Securities Act of 1933, require that all securities offered to the public be registered with the Securities and Exchange Commission (SEC) unless they qualify for an exemption. Registration helps to ensure that investors receive essential information about the security being offered, thus promoting transparency and protecting investors from fraud. This law aims to maintain fair and efficient markets, ensuring that all market participants have access to the same information to make informed decisions. Therefore, unregistered securities cannot be traded on national exchanges, where regulatory oversight is present to enforce compliance with these laws. Overall, trading unregistered securities undermines the integrity of the market and poses significant risks to investors, justifying the strict restrictions in place against such practices.

Selling unregistered securities on a national exchange is generally considered illegal because the securities laws, specifically those established by the Securities Act of 1933, require that all securities offered to the public be registered with the Securities and Exchange Commission (SEC) unless they qualify for an exemption. Registration helps to ensure that investors receive essential information about the security being offered, thus promoting transparency and protecting investors from fraud.

This law aims to maintain fair and efficient markets, ensuring that all market participants have access to the same information to make informed decisions. Therefore, unregistered securities cannot be traded on national exchanges, where regulatory oversight is present to enforce compliance with these laws.

Overall, trading unregistered securities undermines the integrity of the market and poses significant risks to investors, justifying the strict restrictions in place against such practices.