15 U.S.C. § 77c — Classes of securities under this subchapter

Page 124 TITLE 15—COMMERCE AND TRADE § 77c 1 See References in Text note below. (B) issuing orders of general applicability; under this subchapter in a manner that imposes or specifies reporting or recordkeeping require- ments, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any security-based swap agreement (as defined in section 78c(a)(78) of this title). (4) References in this subchapter to the ‘‘pur- chase’’ or ‘‘sale’’ of a security-based swap agree- ment shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap agree- ment (as defined in section 78c(a)(78) of this title), as the context may require. (May 27, 1933, ch. 38, title I, § 2A, as added Pub. L. 106–554, § 1(a)(5) [title III, § 302(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–451; amended Pub. L. 111–203, title VII, § 762(c)(1), July 21, 2010, 124 Stat. 1759.) Editorial Notes AMENDMENTS 2010—Subsec. (a). Pub. L. 111–203, § 762(c)(1)(A), struck out subsec. (a) and reserved subsec. (a) designation. Text read as follows: ‘‘The definition of ‘security’ in section 77b(a)(1) of this title does not include any non- security-based swap agreement (as defined in section 206C of the Gramm-Leach-Bliley Act).’’ Subsec. (b). Pub. L. 111–203, § 762(c)(1)(B), substituted ‘‘(as defined in section 78c(a)(78) of this title)’’ for ‘‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provi- sion of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation imple- menting such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as a note under section 77b of this title. § 77c. Classes of securities under this subchapter (a) Exempted securities Except as hereinafter expressly provided, the provisions of this subchapter shall not apply to any of the following classes of securities: (1) Reserved. (2) Any security issued or guaranteed by the United States or any territory thereof, or by the District of Columbia, or by any State of the United States, or by any political subdivi- sion of a State or territory, or by any public instrumentality of one or more States or ter- ritories, or by any person controlled or super- vised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing; or any security issued or guaranteed by any bank; or any security issued by or representing an interest in or a direct obligation of a Federal Reserve bank; or any interest or participation in any common trust fund or similar fund that is excluded from the definition of the term ‘‘investment company’’ under section 3(c)(3) of the Invest- ment Company Act of 1940 [15 U.S.C. 80a–3(c)(3)]; or any security which is an indus- trial development bond (as defined in section 103(c)(2) 1 of title 26) the interest on which is excludable from gross income under section 103(a)(1) 1 of title 26 if, by reason of the appli- cation of paragraph (4) or (6) of section 103(c) 1 of title 26 (determined as if paragraphs (4)(A), (5), and (7) were not included in such section 103(c)),1 paragraph (1) of such section 103(c) 1 does not apply to such security; or any inter- est or participation in a single trust fund, or in a collective trust fund maintained by a bank, or any security arising out of a contract issued by an insurance company, which inter- est, participation, or security is issued in con- nection with (A) a stock bonus, pension, or profit-sharing plan which meets the require- ments for qualification under section 401 of title 26, (B) an annuity plan which meets the requirements for the deduction of the employ- er’s contributions under section 404(a)(2) of title 26, (C) a governmental plan as defined in section 414(d) of title 26 which has been estab- lished by an employer for the exclusive benefit of its employees or their beneficiaries for the purpose of distributing to such employees or their beneficiaries the corpus and income of the funds accumulated under such plan, if under such plan it is impossible, prior to the satisfaction of all liabilities with respect to such employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted to, purposes other than the ex- clusive benefit of such employees or their beneficiaries, or (D) a church plan, company, or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 [15 U.S.C. 80a–3(c)(14)], other than any plan de- scribed in subparagraph (A), (B), (C), or (D) of this paragraph (i) the contributions under which are held in a single trust fund or in a separate account maintained by an insurance company for a single employer and under which an amount in excess of the employer’s contribution is allocated to the purchase of se- curities (other than interests or participations in the trust or separate account itself) issued by the employer or any company directly or indirectly controlling, controlled by, or under common control with the employer, (ii) which covers employees some or all of whom are em- ployees within the meaning of section 401(c)(1) of title 26 (other than a person participating in a church plan who is described in section 414(e)(3)(B) of title 26), or (iii) which is a plan funded by an annuity contract described in section 403(b) of title 26 (other than a retire- ment income account described in section 403(b)(9) of title 26, to the extent that the in- terest or participation in such single trust fund or collective trust fund is issued to a church, a convention or association of church- es, or an organization described in section 414(e)(3)(A) of title 26 establishing or main- Page 125 TITLE 15—COMMERCE AND TRADE § 77c taining the retirement income account or to a trust established by any such entity in con- nection with the retirement income account). The Commission, by rules and regulations or order, shall exempt from the provisions of sec- tion 77e of this title any interest or participa- tion issued in connection with a stock bonus, pension, profit-sharing, or annuity plan which covers employees some or all of whom are em- ployees within the meaning of section 401(c)(1) of title 26, if and to the extent that the Com- mission determines this to be necessary or ap- propriate in the public interest and consistent with the protection of investors and the pur- poses fairly intended by the policy and provi- sions of this subchapter. For purposes of this paragraph, a security issued or guaranteed by a bank shall not include any interest or par- ticipation in any collective trust fund main- tained by a bank; and the term ‘‘bank’’ means any national bank, or banking institution or- ganized under the laws of any State, territory, or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial bank- ing commission or similar official; except that in the case of a common trust fund or similar fund, or a collective trust fund, the term ‘‘bank’’ has the same meaning as in the In- vestment Company Act of 1940 [15 U.S.C. 80a–1 et seq.]; (3) Any note, draft, bill of exchange, or banker’s acceptance which arises out of a cur- rent transaction or the proceeds of which have been or are to be used for current trans- actions, and which has a maturity at the time of issuance of not exceeding nine months, ex- clusive of days of grace, or any renewal there- of the maturity of which is likewise limited; (4) Any security issued by a person organized and operated exclusively for religious, edu- cational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual, or any security of a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940 [15 U.S.C. 80a–3(c)(10)(B)]; (5) Any security issued (A) by a savings and loan association, building and loan associa- tion, cooperative bank, homestead associa- tion, or similar institution, which is super- vised and examined by State or Federal au- thority having supervision over any such in- stitution; or (B) by (i) a farmer’s cooperative organization exempt from tax under section 521 of title 26, (ii) a corporation described in section 501(c)(16) of title 26 and exempt from tax under section 501(a) of title 26, or (iii) a corporation described in section 501(c)(2) of title 26 which is exempt from tax under sec- tion 501(a) of title 26 and is organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization or corporation described in clause (i) or (ii); (6) Any interest in a railroad equipment trust. For purposes of this paragraph ‘‘interest in a railroad equipment trust’’ means any in- terest in an equipment trust, lease, condi- tional sales contract, or other similar arrange- ment entered into, issued, assumed, guaran- teed by, or for the benefit of, a common car- rier to finance the acquisition of rolling stock, including motive power; (7) Certificates issued by a receiver or by a trustee or debtor in possession in a case under title 11, with the approval of the court; (8) Any insurance or endowment policy or annuity contract or optional annuity con- tract, issued by a corporation subject to the supervision of the insurance commissioner, bank commissioner, or any agency or officer performing like functions, of any State or Ter- ritory of the United States or the District of Columbia; (9) Except with respect to a security ex- changed in a case under title 11, any security exchanged by the issuer with its existing secu- rity holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange; (10) Except with respect to a security ex- changed in a case under title 11, any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and con- ditions of such issuance and exchange are ap- proved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court, or by any official or agency of the United States, or by any State or Terri- torial banking or insurance commission or other governmental authority expressly au- thorized by law to grant such approval; (11) Any security which is a part of an issue offered and sold only to persons resident with- in a single State or Territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incor- porated by and doing business within, such State or Territory. (12) Any equity security issued in connection with the acquisition by a holding company of a bank under section 1842(a) of title 12 or a savings association under section 1467a(e) of title 12, if— (A) the acquisition occurs solely as part of a reorganization in which security holders exchange their shares of a bank or savings association for shares of a newly formed holding company with no significant assets other than securities of the bank or savings association and the existing subsidiaries of the bank or savings association; (B) the security holders receive, after that reorganization, substantially the same pro- portional share interests in the holding com- pany as they held in the bank or savings as- sociation, except for nominal changes in shareholders’ interests resulting from lawful elimination of fractional interests and the exercise of dissenting shareholders’ rights under State or Federal law; (C) the rights and interests of security holders in the holding company are substan- Page 126 TITLE 15—COMMERCE AND TRADE § 77c tially the same as those in the bank or sav- ings association prior to the transaction, other than as may be required by law; and (D) the holding company has substantially the same assets and liabilities, on a consoli- dated basis, as the bank or savings associa- tion had prior to the transaction. For purposes of this paragraph, the term ‘‘sav- ings association’’ means a savings association (as defined in section 1813(b) of title 12) the de- posits of which are insured by the Federal De- posit Insurance Corporation. (13) Any security issued by or any interest or participation in any church plan, company or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 [15 U.S.C. 80a–3(c)(14)]. (14) Any security futures product that is— (A) cleared by a clearing agency registered under section 78q–1 of this title or exempt from registration under subsection (b)(7) of such section 78q–1; and (B) traded on a national securities ex- change or a national securities association registered pursuant to section 78o–3(a) of this title. (b) Additional exemptions (1) Small issues exemptive authority The Commission may from time to time by its rules and regulations, and subject to such terms and conditions as may be prescribed therein, add any class of securities to the se- curities exempted as provided in this section, if it finds that the enforcement of this sub- chapter with respect to such securities is not necessary in the public interest and for the protection of investors by reason of the small amount involved or the limited character of the public offering; but no issue of securities shall be exempted under this subsection where the aggregate amount at which such issue is offered to the public exceeds $5,000,000. (2) Additional issues The Commission shall by rule or regulation add a class of securities to the securities ex- empted pursuant to this section in accordance with the following terms and conditions: (A) The aggregate offering amount of all securities offered and sold within the prior 12-month period in reliance on the exemp- tion added in accordance with this para- graph shall not exceed $50,000,000. (B) The securities may be offered and sold publicly. (C) The securities shall not be restricted securities within the meaning of the Federal securities laws and the regulations promul- gated thereunder. (D) The civil liability provision in section 77l(a)(2) of this title shall apply to any per- son offering or selling such securities. (E) The issuer may solicit interest in the offering prior to filing any offering state- ment, on such terms and conditions as the Commission may prescribe in the public in- terest or for the protection of investors. (F) The Commission shall require the issuer to file audited financial statements with the Commission annually. (G) Such other terms, conditions, or re- quirements as the Commission may deter- mine necessary in the public interest and for the protection of investors, which may in- clude— (i) a requirement that the issuer prepare and electronically file with the Commis- sion and distribute to prospective inves- tors an offering statement, and any related documents, in such form and with such content as prescribed by the Commission, including audited financial statements, a description of the issuer’s business oper- ations, its financial condition, its cor- porate governance principles, its use of in- vestor funds, and other appropriate mat- ters; and (ii) disqualification provisions under which the exemption shall not be available to the issuer or its predecessors, affiliates, officers, directors, underwriters, or other related persons, which shall be substan- tially similar to the disqualification provi- sions contained in the regulations adopted in accordance with section 926 of the Dodd- Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 77d note). (3) Limitation Only the following types of securities may be exempted under a rule or regulation adopt- ed pursuant to paragraph (2): equity securities, debt securities, and debt securities convertible or exchangeable to equity interests, including any guarantees of such securities. (4) Periodic disclosures Upon such terms and conditions as the Com- mission determines necessary in the public in- terest and for the protection of investors, the Commission by rule or regulation may require an issuer of a class of securities exempted under paragraph (2) to make available to in- vestors and file with the Commission periodic disclosures regarding the issuer, its business operations, its financial condition, its cor- porate governance principles, its use of inves- tor funds, and other appropriate matters, and also may provide for the suspension and termi- nation of such a requirement with respect to that issuer. (5) Adjustment Not later than 2 years after April 5, 2012,1 and every 2 years thereafter, the Commission shall review the offering amount limitation described in paragraph (2)(A) and shall in- crease such amount as the Commission deter- mines appropriate. If the Commission deter- mines not to increase such amount, it shall re- port to the Committee on Financial Services of the House of Representatives and the Com- mittee on Banking, Housing, and Urban Af- fairs of the Senate on its reasons for not in- creasing the amount. (c) Securities issued by small investment com- pany The Commission may from time to time by its rules and regulations and subject to such terms and conditions as may be prescribed therein, add to the securities exempted as provided in this Page 127 TITLE 15—COMMERCE AND TRADE § 77c section any class of securities issued by a small business investment company under the Small Business Investment Act of 1958 [15 U.S.C. 661 et seq.] if it finds, having regard to the purposes of that Act, that the enforcement of this sub- chapter with respect to such securities is not necessary in the public interest and for the pro- tection of investors. (May 27, 1933, ch. 38, title I, § 3, 48 Stat. 75; June 6, 1934, ch. 404, title II, § 202, 48 Stat. 906; Feb. 4, 1887, ch. 104, title II, § 214, as added Aug. 9, 1935, ch. 498, 49 Stat. 557; amended June 29, 1938, ch. 811, § 15, 52 Stat. 1240; May 15, 1945, ch. 122, 59 Stat. 167; Aug. 10, 1954, ch. 667, title I, § 5, 68 Stat. 684; Pub. L. 85–699, title III, § 307(a), Aug. 21, 1958, 72 Stat. 694; Pub. L. 91–373, title IV, § 401(a), Aug. 10, 1970, 84 Stat. 718; Pub. L. 91–547, § 27(b), (c), Dec. 14, 1970, 84 Stat. 1434; Pub. L. 91–565, Dec. 19, 1970, 84 Stat. 1480; Pub. L. 91–567, § 6(a), Dec. 22, 1970, 84 Stat. 1498; Pub. L. 94–210, title III, § 308(a)(1), (3), Feb. 5, 1976, 90 Stat. 56, 57; Pub. L. 95–283, § 18, May 21, 1978, 92 Stat. 275; Pub. L. 95–425, § 2, Oct. 6, 1978, 92 Stat. 962; Pub. L. 95–598, title III, § 306, Nov. 6, 1978, 92 Stat. 2674; Pub. L. 96–477, title III, § 301, title VII, § 701, Oct. 21, 1980, 94 Stat. 2291, 2294; Pub. L. 97–261, § 19(d), Sept. 20, 1982, 96 Stat. 1121; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100–181, title II, §§ 203, 204, Dec. 4, 1987, 101 Stat. 1252; Pub. L. 103–325, title III, § 320, Sept. 23, 1994, 108 Stat. 2225; Pub. L. 104–62, § 3, Dec. 8, 1995, 109 Stat. 684; Pub. L. 104–290, title V, § 508(b), Oct. 11, 1996, 110 Stat. 3447; Pub. L. 106–102, title II, § 221(a), Nov. 12, 1999, 113 Stat. 1401; Pub. L. 106–554, § 1(a)(5) [title II, § 208(a)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–435; Pub. L. 108–359, § 1(b), Oct. 25, 2004, 118 Stat. 1666; Pub. L. 111–203, title IX, § 985(a)(1), July 21, 2010, 124 Stat. 1933; Pub. L. 112–106, title IV, § 401(a), Apr. 5, 2012, 126 Stat. 323; Pub. L. 112–142, § 2, July 9, 2012, 126 Stat. 989.) Editorial Notes REFERENCES IN TEXT Section 103 of title 26, referred to in subsec. (a)(2), which related to interest on certain governmental obli- gations was amended generally by Pub. L. 99–514, title XIII, § 1301(a), Oct. 22, 1986, 100 Stat. 2602, and as so amended relates to interest on State and local bonds. Section 103(b)(2) (formerly section 103(c)(2)), which prior to the general amendment defined industrial de- velopment bond, relates to the applicability of the in- terest exclusion to arbitrage bonds. The Investment Company Act of 1940, referred to in subsec. (a)(2), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see section 80a–51 of this title and Tables. Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in subsec. (b)(2)(G)(ii), is section 926 of Pub. L. 111–203, which is set out as a note under section 77d of this title. April 5, 2012, referred to in subsec. (b)(5), was in the original ‘‘the date of enactment of the Small Company Capital Formation Act of 2011’’, and was translated as meaning the date of enactment of the Jumpstart Our Business Startups Act, Pub. L. 112–106, which enacted subsec. (b)(5), to reflect the probable intent of Con- gress. The Small Business Investment Act of 1958, referred to in subsec. (c), is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689, which is classified principally to chapter 14B (§ 661 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 661 of this title and Tables. AMENDMENTS 2012—Subsec. (a)(2). Pub. L. 112–142 inserted ‘‘(other than a retirement income account described in section 403(b)(9) of title 26, to the extent that the interest or participation in such single trust fund or collective trust fund is issued to a church, a convention or asso- ciation of churches, or an organization described in sec- tion 414(e)(3)(A) of title 26 establishing or maintaining the retirement income account or to a trust established by any such entity in connection with the retirement income account)’’ after ‘‘403(b) of title 26’’ and ‘‘(other than a person participating in a church plan who is de- scribed in section 414(e)(3)(B) of title 26)’’ after ‘‘(ii) which covers employees some or all of whom are em- ployees within the meaning of section 401(c)(1) of title 26’’. Subsec. (b). Pub. L. 112–106 inserted subsec. heading, designated existing provisions as par. (1), inserted par. heading, and added pars. (2) to (5). 2010—Subsec. (a)(4). Pub. L. 111–203 substituted ‘‘indi- vidual,’’ for ‘‘individual;’’. 2004—Subsec. (a)(2). Pub. L. 108–359 struck out ‘‘or’’ before ‘‘(C) a governmental plan’’ and substituted ‘‘or (D) a church plan, company, or account that is ex- cluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940, other than any plan described in subparagraph (A), (B), (C), or (D)’’ for ‘‘other than any plan described in clause (A), (B), or (C)’’. 2000—Subsec. (a)(14). Pub. L. 106–554 added par. (14). 1999—Subsec. (a)(2). Pub. L. 106–102 substituted ‘‘or any interest or participation in any common trust fund or similar fund that is excluded from the definition of the term ‘investment company’ under section 3(c)(3) of the Investment Company Act of 1940’’ for ‘‘or any inter- est or participation in any common trust fund or simi- lar fund maintained by a bank exclusively for the col- lective investment and reinvestment of assets contrib- uted thereto by such bank in its capacity as trustee, executor, administrator, or guardian’’. 1996—Subsec. (a)(13). Pub. L. 104–290 added par. (13). 1995—Subsec. (a)(4). Pub. L. 104–62 inserted at end ‘‘or any security of a fund that is excluded from the defini- tion of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940;’’. 1994—Subsec. (a)(12). Pub. L. 103–325 added par. (12). 1987—Subsec. (a)(1). Pub. L. 100–181, § 203, substituted ‘‘Reserved.’’ for ‘‘Any security which, prior to or within sixty days after May 27, 1933, has been sold or disposed of by the issuer or bona fide offered to the public, but this exemption shall not apply to any new offering of any such security by an issuer or underwriter subse- quent to such sixty days;’’. Subsec. (a)(5)(A). Pub. L. 100–181, § 204, struck out ‘‘, except that the foregoing exemption shall not apply with respect to any such security where the issuer takes from the total amount paid or deposited by the purchaser, by way of any fee, cash value or other device whatsoever, either upon termination of the investment at maturity or before maturity, an aggregate amount in excess of 3 per centum of the face value of such secu- rity’’ after ‘‘any such institution’’. 1986—Subsec. (a)(2), (5). Pub. L. 99–514 substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’ wherever appearing, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no change in text. 1982—Subsec. (a)(6). Pub. L. 97–261 struck out provi- sions relating to any security issued by a motor carrier subject to provisions of section 314 [11302] of title 49. 1980—Subsec. (a)(2). Pub. L. 96–477, § 701, provided that single trust funds did not have to be maintained by banks in order to qualify for exemption from the provi- sions of this subchapter, substituted provisions relating to securities arising out of contracts issued by insur- ance companies for provisions relating to separate ac- counts maintained by insurance companies, provided Page 128 TITLE 15—COMMERCE AND TRADE § 77c that an interest, participation, or security could be issued in connection with certain governmental plans as defined in section 414(d) of title 26 and qualify for ex- emption from the provisions of this subchapter, and ex- cluded from exemption plans described in cls. (A), (B), or (C) of par. (2) which were funded by annuity con- tracts described in section 403(b) of title 26. Subsec. (b). Pub. L. 96–477, § 301, substituted ‘‘$5,000,000’’ for ‘‘$2,000,000’’. 1978—Subsec. (a)(7). Pub. L. 95–598, § 306(a), sub- stituted ‘‘or debtor in possession in a case under title 11’’ for ‘‘in bankruptcy’’. Subsec. (a)(9), (10). Pub. L. 95–598, § 306(b), substituted ‘‘Except with respect to a security exchanged in a case under title 11, any’’ for ‘‘Any’’. Subsec. (b). Pub. L. 95–425 substituted ‘‘$2,000,000’’ for ‘‘$1,500,000’’. Pub. L. 95–283 substituted ‘‘$1,500,000’’ for ‘‘$500,000’’. 1976—Subsec. (a)(6). Pub. L. 94–210 substituted provi- sions relating to any security issued by a motor carrier subject to the provisions of section 314 of title 49 or any interest in a railroad equipment trust, and provisions defining ‘‘interest in a railroad equipment trust’’, for provisions relating to any security issued by a common or contract carrier, subject to the provisions of section 20a of title 49. 1970—Subsec. (a)(2). Pub. L. 91–567 exempted any in- terest or participation in any common trust fund or similar fund maintained by a bank exclusively for the collective investment and reinvestment of assets con- tributed thereto by such bank in its capacity as trust- ee, executor, administrator, or guardian, any security which is an industrial development bond the interest on which is excludable from gross income under section 103(a)(1) of title 26, any interest or participation in a single or collective trust fund maintained by a bank or in a separate account maintained by an insurance com- pany which interest or participation is issued in con- nection with a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of title 26, or an annuity plan which meets the requirements for the deduction of the em- ployer’s contribution under section 404(a)(2) of title 26, directed the Commission to exempt from the provisions of section 77e of this title any interest or participation issued in connection with a stock bonus, pension, prof- it-sharing, or annuity plan which covers employees some or all of whom are employees within the meaning of section 401(c)(1) of title 26 if and to the extent that the Commission determines this to be necessary or ap- propriate in the public interest and consistent with the protection of investors, and provided that for the pur- poses of this paragraph a security issued or guaranteed by a bank shall not include any interest or participa- tion in any collective trust fund maintained by a bank, and that in the case of a common trust fund or similar fund, or a collective trust fund, the term ‘‘bank’’ has the same meaning as in the Investment Company Act of 1940. Pub. L. 91–547, § 27(b), struck out reference to indus- trial development bonds the interest on which is ex- cludable from gross income under section 103(a)(1) of title 26; and exempted from registration provisions in- terests or participations in common trust funds main- tained by a bank for collective investment of assets held by it in a fiduciary capacity interests or participa- tions in bank collective trust funds maintained for funding of employees’ stock bonus, pension, or profit- sharing plans; interests or participations in separate accounts maintained by insurance companies for fund- ing certain stock-bonus, pension, or profit-sharing plans which meet the requirements for qualification under section 401 of title 26; and interests or participa- tions issued by bank collective trust funds or insurance company separate accounts for funding certain stock- bonus, pension, profit-sharing, or annuity plans when the Commission by rule, regulation, or order deter- mines this to be necessary in the public interest; pro- vided that a security issued or guaranteed by a bank shall not include any interest or participation in any collective trust fund maintained by a bank; substituted where first appearing ‘‘security issued or guaranteed by any bank’’ for ‘‘security issued or guaranteed by any national bank, or by any banking institution organized under the laws of any State or Territory or the District of Columbia, the business of which is substantially con- fined to banking and is supervised by the State or Ter- ritorial banking commission or similar official’’, the latter provision now incorporated in a separate defini- tion of term ‘‘bank’’; and made the Investment Com- pany Act definition of bank applicable as in the case of a common trust fund or similar fund, or a collective trust fund. Pub. L. 91–373 inserted reference to industrial devel- opment bonds the interest on which is excludable from gross income under section 103(a)(1) of title 26. Subsec. (a)(5). Pub. L. 91–547, § 27(c), designated exist- ing provisions as cl. (A), included cooperative bank issues, required the issuer to be an institution which is supervised and examined by State or Federal authority having supervision over such institution, struck out ‘‘substantially all the business of which is confined to the making of loans to members’’ after ‘‘similar insti- tution’’ and substituted provisions designated as cl. (B) for prior provision relating to a security issued by a farmers’ cooperative association as defined in para- graphs (12), (13), and (14) of section 103 of the Revenue Act of 1932. Subsec. (b). Pub. L. 91–565 substituted ‘‘$500,000’’ for ‘‘$300,000’’. 1958—Subsec. (c). Pub. L. 85–699 added subsec. (c). 1954—Subsec. (a)(11). Act Aug. 10, 1954, inserted ‘‘of- fered and’’ before ‘‘sold’’. 1945—Subsec. (b). Act May 15, 1945, substituted ‘‘$300,000’’ for ‘‘$100,000’’. 1938—Subsec. (a)(6). Act June 29, 1938, reenacted par. (6) without change. 1935—Subsec. (a)(6). Act Feb. 4, 1887, as added by act Aug. 9, 1935, included a security issued by a contract carrier. 1934—Subsec. (a). Act June 6, 1934, amended pars. (2), (4), and (8) and added pars. (9) to (11). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. EFFECTIVE DATE OF 1999 AMENDMENT Pub. L. 106–102, title II, § 225, Nov. 12, 1999, 113 Stat. 1402, provided that: ‘‘This subtitle [subtitle B (§§ 211–225) of title II of Pub. L. 106–102, enacting section 80b–10a of this title and amending this section and sec- tions 78c, 80a–2, 80a–3, 80a–9, 80a–10, 80a–17, 80a–26, 80a–34, and 80b–2 of this title] shall take effect 18 months after the date of the enactment of this Act [Nov. 12, 1999].’’ EFFECTIVE DATE OF 1995 AMENDMENT Pub. L. 104–62, § 7, Dec. 8, 1995, 109 Stat. 686, provided that: ‘‘This Act [enacting section 80a–3a of this title, amending this section and sections 78c, 78l, 80a–3, 80a–7, and 80b–3 of this title, and enacting provisions set out as a note under section 80a–51 of this title] and the amendments made by this Act shall apply in all admin- istrative and judicial actions pending on or commenced after the date of enactment of this Act [Dec. 8, 1995], as a defense to any claim that any person, security, inter- est, or participation of the type described in this Act and the amendments made by this Act is subject to the provisions of the Securities Act of 1933 [15 U.S.C. 77a et seq.], the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], or the Investment Advisers Act of 1940 [15 U.S.C. 80b–1 et seq.], or any State statute or regulation preempted as provided in section 6 of this Act [enacting Page 129 TITLE 15—COMMERCE AND TRADE § 77c section 80a–3a of this title], except as otherwise specifi- cally provided in such Acts or State law.’’ EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–261, § 31, Sept. 20, 1982, 96 Stat. 1129, pro- vided that: ‘‘(a) Except as provided in subsections (b) and (c) of this section, this Act [see Tables for classification] shall take effect on the 60th day after the date of enact- ment of this Act [Sept. 20, 1982]. ‘‘(b) The amendment made by section 10(e)(4) of this Act [amending provisions set out as a note under former section 10706 of Title 49, Transportation] shall take effect on October 1, 1982. ‘‘(c) The provisions of sections 6(g) and 30 of this Act [amending former sections 10922 and 10525 of Title 49, respectively] shall take effect on the date of enactment of this Act [Sept. 20, 1982].’’ EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598 set out as an Effec- tive Date note preceding section 101 of Title 11, Bank- ruptcy. EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–210, § 308(d)(1), Feb. 5, 1976, 90 Stat. 57, pro- vided that: ‘‘The amendments made by subsection (a) of this section [amending this section, section 77s of this title, and section 314 of former Title 49, Transportation] shall take effect on the 60th day after the date of enact- ment of this Act [Feb. 5, 1976], but shall not apply to any bona fide offering of a security made by the issuer, or by or through an underwriter, before such 60th day.’’ EFFECTIVE DATE OF 1970 AMENDMENTS Pub. L. 91–567, § 6(d), Dec. 22, 1970, 84 Stat. 1499, pro- vided that: ‘‘The amendments made by this section [amending this section and sections 77ddd and 78c of this title] shall apply with respect to securities sold after January 1, 1970.’’ Amendment by Pub. L. 91–547 effective Dec. 14, 1970, see section 30 of Pub. L. 91–547, set out as a note under section 80a–52 of this title. Pub. L. 91–373, title IV, § 401(c), Aug. 10, 1970, 84 Stat. 718, provided that: ‘‘The amendments made by this sec- tion [amending this section and section 78c of this title] shall apply with respect to securities sold after January 1, 1970.’’ EFFECTIVE DATE OF 1954 AMENDMENT Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10, 1954, see note under section 77b of this title. REPEALS Section 214 of act Feb. 4, 1887 (the Interstate Com- merce Act), as added Aug. 9, 1935, ch. 498, 49 Stat. 557, cited as a credit to this section, was repealed by Pub. L. 97–449, § 7(b), Jan. 12, 1983, 96 Stat. 2443, 2444. FURTHER PROMOTING THE ADOPTION OF THE NAIC MODEL REGULATIONS THAT ENHANCE PROTECTION OF SENIORS AND OTHER CONSUMERS Pub. L. 111–203, title IX, § 989J, July 21, 2010, 124 Stat. 1949, provided that: ‘‘(a) IN GENERAL.—The Commission shall treat as ex- empt securities described under section 3(a)(8) of the Securities Act of 1933 (15 U.S.C. 77c(a)(8)) any insurance or endowment policy or annuity contract or optional annuity contract— ‘‘(1) the value of which does not vary according to the performance of a separate account; ‘‘(2) that— ‘‘(A) satisfies standard nonforfeiture laws or simi- lar requirements of the applicable State at the time of issue; or ‘‘(B) in the absence of applicable standard nonfor- feiture laws or requirements, satisfies the Model Standard Nonforfeiture Law for Life Insurance or Model Standard Nonforfeiture Law for Individual Deferred Annuities, or any successor model law, as published by the National Association of Insurance Commissioners; and ‘‘(3) that is issued— ‘‘(A) on and after June 16, 2013, in a State, or issued by an insurance company that is domiciled in a State, that— ‘‘(i) adopts rules that govern suitability re- quirements in the sale of an insurance or endow- ment policy or annuity contract or optional an- nuity contract, which shall substantially meet or exceed the minimum requirements established by the Suitability in Annuity Transactions Model Regulation adopted by the National Association of Insurance Commissioners in March 2010; and ‘‘(ii) adopts rules that substantially meet or ex- ceed the minimum requirements of any successor modifications to the model regulations described in subparagraph (A) within 5 years of the adop- tion by the Association of any further successors thereto; or ‘‘(B) by an insurance company that adopts and implements practices on a nationwide basis for the sale of any insurance or endowment policy or annu- ity contract or optional annuity contract that meet or exceed the minimum requirements established by the National Association of Insurance Commis- sioners Suitability in Annuity Transactions Model Regulation (Model 275), and any successor thereto, and is therefore subject to examination by the State of domicile of the insurance company, or by any other State where the insurance company con- ducts sales of such products, for the purpose of monitoring compliance under this section. ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this section shall be construed to affect whether any insurance or endowment policy or annuity contract or optional an- nuity contract that is not described in this section is or is not an exempt security under section 3(a)(8) of the Securities Act of 1933 (15 U.S.C. 77c(a)(8)).’’ [For definitions of terms used in section 989J of Pub. L. 111–203, set out above, see section 5301 of Title 12, Banks and Banking.] SECURITIES AND INVESTMENT COMPANY PROVISIONS IN- APPLICABLE TO CERTAIN LIFE INSURANCE BENEFITS ISSUED PRIOR TO MARCH 23, 1959 Pub. L. 91–547, § 29, Dec. 14, 1970, 84 Stat. 1436, provided that: ‘‘The provisions of the Securities Act of 1933 [this subchapter] and the Investment Company Act of 1940 [section 80a–1 et seq. of this title] shall not apply, ex- cept for purposes of definition of terms used in this sec- tion, to any interest or participation (including any separate account or other fund providing for the shar- ing of income or gains and losses, and any interest or participation in such account or fund) in any contract, certificate, or policy providing for life insurance bene- fits which was issued prior to March 23, 1959, by an in- surance company, if (1) the form of such contract, cer- tificate, or policy was approved by the insurance com- missioner, or similar official or agency, of a State, ter- ritory or the District of Columbia, and (2) under such contract, certificate, or policy not to exceed 49 per cen- tum of the gross premiums or other consideration paid was to be allocated to a separate account or other fund providing for the sharing of income or gains and losses. Nothing herein contained shall be taken to imply that any such interest or participation constitutes a ‘secu- rity’ under any other laws of the United States.’’ Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. Page 130 TITLE 15—COMMERCE AND TRADE § 77d 1 See References in Text note below. § 77d. Exempted transactions (a) In general The provisions of section 77e of this title shall not apply to— (1) transactions by any person other than an issuer, underwriter, or dealer. (2) transactions by an issuer not involving any public offering. (3) transactions by a dealer (including an un- derwriter no longer acting as an underwriter in respect of the security involved in such transaction), except— (A) transactions taking place prior to the expiration of forty days after the first date upon which the security was bona fide of- fered to the public by the issuer or by or through an underwriter, (B) transactions in a security as to which a registration statement has been filed tak- ing place prior to the expiration of forty days after the effective date of such registra- tion statement or prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an un- derwriter after such effective date, which- ever is later (excluding in the computation of such forty days any time during which a stop order issued under section 77h of this title is in effect as to the security), or such shorter period as the Commission may speci- fy by rules and regulations or order, and (C) transactions as to securities consti- tuting the whole or a part of an unsold allot- ment to or subscription by such dealer as a participant in the distribution of such secu- rities by the issuer or by or through an un- derwriter. With respect to transactions referred to in clause (B), if securities of the issuer have not previously been sold pursuant to an earlier ef- fective registration statement the applicable period, instead of forty days, shall be ninety days, or such shorter period as the Commis- sion may specify by rules and regulations or order. (4) brokers’ transactions executed upon cus- tomers’ orders on any exchange or in the over- the-counter market but not the solicitation of such orders. (5) transactions involving offers or sales by an issuer solely to one or more accredited in- vestors, if the aggregate offering price of an issue of securities offered in reliance on this paragraph does not exceed the amount allowed under section 77c(b)(1) of this title, if there is no advertising or public solicitation in connec- tion with the transaction by the issuer or any- one acting on the issuer’s behalf, and if the issuer files such notice with the Commission as the Commission shall prescribe. (6) transactions involving the offer or sale of securities by an issuer (including all entities controlled by or under common control with the issuer), provided that— (A) the aggregate amount sold to all inves- tors by the issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such trans- action, is not more than $1,000,000; (B) the aggregate amount sold to any in- vestor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such trans- action, does not exceed— (i) the greater of $2,000 or 5 percent of the annual income or net worth of such in- vestor, as applicable, if either the annual income or the net worth of the investor is less than $100,000; and (ii) 10 percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either the an- nual income or net worth of the investor is equal to or more than $100,000; (C) the transaction is conducted through a broker or funding portal that complies with the requirements of section 77d–1(a) of this title; and (D) the issuer complies with the require- ments of section 77d–1(b) of this title. (7) transactions meeting the requirements of subsection (d). (b) Offers and sales exempt under 17 CFR 230.506 Offers and sales exempt under section 230.506 of title 17, Code of Federal Regulations (as re- vised pursuant to section 201 of the Jumpstart Our Business Startups Act) shall not be deemed public offerings under the Federal securities laws as a result of general advertising or general solicitation. (c) Securities offered and sold in compliance with Rule 506 of Regulation D (1) With respect to securities offered and sold in compliance with Rule 506 of Regulation D under this subchapter, no person who meets the conditions set forth in paragraph (2) shall be subject to registration as a broker or dealer pur- suant to section 78o(a)(1) of this title,1 solely be- cause— (A) that person maintains a platform or mechanism that permits the offer, sale, pur- chase, or negotiation of or with respect to se- curities, or permits general solicitations, gen- eral advertisements, or similar or related ac- tivities by issuers of such securities, whether online, in person, or through any other means; (B) that person or any person associated with that person co-invests in such securities; or (C) that person or any person associated with that person provides ancillary services with respect to such securities. (2) The exemption provided in paragraph (1) shall apply to any person described in such para- graph if— (A) such person and each person associated with that person receives no compensation in connection with the purchase or sale of such security; (B) such person and each person associated with that person does not have possession of customer funds or securities in connection with the purchase or sale of such security; and