ShmoopTube

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Finance a la shmoop what are exempt securities and exempt transactions? well

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the first thing that should strike you is that in both of these cases they are [Man on stage giving a speech]

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no longer emp'd okay crickets eggs empt.. no okay all right we try you know no

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extra charge here we try all right well a security is exempt from regulation if

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it lives outside of or doesn't need to meet the various registration

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requirements of the Securities Act of 1933 right like it's exempt from

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regulation and remember that Act it was built to protect average joe's and

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Josie's from farmland to urban land so that fast-talking city slickers didn't

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get them to invest their hard-earned money in things that had no more value [Average Joe and Josie's money transfers to city slickers]

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than "the blue sky above them" remember that judge said that on

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the blue sky laws yeah it's that act well if you want to raise public money

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from American investors in America well your security is by default not exempt

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from regulation and you have to go through all the dance steps demanded by

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the regulators to raise money here so what kind of security would live outside

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of the 33 act? well something that is insured by the government our government

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if it's insured by a Somalian warlord.com well then that doesn't count it's [Somalian soldiers appears]

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not exempt well the quick list of normally exempt securities here we go

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it's these government or government institutions banks or depository

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institutions insurance companies authorized to do business in the state

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railroads and public utility securities options or warrant and there for big

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boys and girls only employee benefit plans equipment trust certificates and

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nonprofit corporations like intentionally nonprofit ones not like

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just bad companies who never make a real profit all right well the idea here

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generally is that these securities are less of a risk for investors so the SEC

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doesn't really have to get involved you can just invest in them and

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you know things normally are boringly just fine all right well the same vibe [Man discussing securities]

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applies to exempt transactions an exempt transaction is one that doesn't

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have to meet all the registration requirements of the Uniform Securities

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Act or the SEC and the idea here is that every transaction creates a whole lot of

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paperwork and there are just some cases where all the hassle isn't needed as [Paper work stacks up on man's desk]

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long as you're trading small amounts of stocks or doing small investments in

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known entities that are generally considered legal well then your

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transaction is considered exempt and then there's a whole lot less paperwork [Paperwork disappears and man jumps up]

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which is a good thing and yeah that's worth celebrating

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