General Securities Representative (Series 7) Practice Exam

Can a person resell securities purchased in a Rule 147 offering to an out-of-state resident?

1. No, never

2. Yes, immediately

3. Yes, but only after 9 months from the last sale by the issuer

4. Yes, if registered with the SEC

The correct answer is: Yes, but only after 9 months from the last sale by the issuer

In a Rule 147 offering, also known as an intrastate offering, there are specific provisions that restrict the resale of securities to ensure they remain within the state where they were sold. Rule 147 allows companies to sell securities to residents of their state without having to register with the SEC, provided they meet certain requirements. The correct answer states that reselling these securities to out-of-state residents can occur, but only after a period of nine months has passed since the last sale by the issuer. This stipulation is in place to prevent the immediate resale of the securities to non-residents and to maintain the intrastate nature of the offering at the beginning. The nine-month waiting period provides a buffer during which the issuer’s securities continue to be held with the intention of remaining an intrastate offering, thus ensuring compliance with the regulatory framework of Rule 147. If an individual were to attempt a resale before this period, it would violate the rule's restrictions, potentially leading to legal issues for both the seller and the issuing company. Therefore, understanding this timeline and the nature of intrastate offerings is essential for individuals involved in trading or investing in securities issued under Rule 147.