Under the Uniform Securities Act, jurisdiction exists in states where an offer is:

• Made

• Directed

• Accepted

In this case:

• The recommendation was made from Texas, giving Texas jurisdiction.

• The client accepted the offer while in Kansas, giving Kansas jurisdiction.

• The fact that the client happened to read the email while in Colorado does not create jurisdiction because the offer was directed to a Texas client, not to Colorado.

• The location of the transfer agent in Missouri is irrelevant for jurisdictional purposes.

Why the Other Answers Are Incorrect

• Colorado does not gain jurisdiction merely because the client was physically located there when the email was read.

• Missouri does not gain jurisdiction because the stock certificate was mailed from that state.

• Jurisdiction is determined by where the offer is made, directed, or accepted.

Series 63 Testing Point

For Administrator jurisdiction, remember:

Jurisdiction exists where an offer is:

• Made

• Directed

• Accepted

Jurisdiction does not depend on:

• Where a certificate is mailed from

• Where a transfer agent is located

• Where a customer happens to be temporarily traveling when communications are received

This is one of the most commonly tested jurisdiction concepts on the Series 63 exam.

Under the Uniform Securities Act, jurisdiction exists in any state where an offer is:

• Made

• Directed

• Received

• Accepted

In this scenario:

• The offer was made from Arizona.

• The offer was received in Utah because the client was physically located there when the call was received.

• The offer was accepted in Nevada when the client agreed to the transaction after returning home.

Therefore, the Administrators of Arizona, Nevada, and Utah all have jurisdiction.

Why the Other Answers Are Incorrect

• Any answer excluding Utah ignores the fact that the offer was received there.

• Any answer excluding Nevada ignores the fact that the offer was accepted there.

• Any answer excluding Arizona ignores the fact that the offer originated there.

Series 63 Testing Point

For jurisdiction questions, identify:

1. Where the offer was made

2. Where the offer was received/directed

3. Where the offer was accepted

A common trap is assuming that only the customer's state of residence matters. The Uniform Securities Act also grants jurisdiction to the state where the offer is received, even if the customer is only temporarily present there.

An offer (offer to sell) includes any attempt to dispose of a security for value, including:

• Advertising or promoting the security for sale

• Soliciting offers to buy

• Offering to dispose of the security for value

The actual completion of the transaction is not an offer. Once the transaction is completed and ownership is transferred for value, a sale has occurred.

Why the Other Answers Are Incorrect

• Any answer including the completed transfer of ownership is incorrect because that activity constitutes a sale, not an offer.

• An offer is the attempt to create a transaction; the sale occurs when the offer is accepted and completed.

Series 63 Testing Point

The Series 63 frequently tests the distinction between offer and sale:

Offer

• Attempt to dispose of a security for value

• Offer to sell

• Solicitation of an offer to buy

Sale

• Contract of sale

• Contract to sell

• Actual disposition of a security for value

A good memory aid is:

Offer = Trying to make the sale
Sale = The transaction actually occurs.

A sale under the Uniform Securities Act includes any disposition or transfer of a security for value. Because municipal bonds are securities and the transfer is made in exchange for payment, a sale has occurred.

Why the Other Answers Are Incorrect

• A gift of stock is not a sale because there is no exchange for value.

• Gold bullion is not a security.

• A fixed annuity is not a security and therefore cannot be the subject of a securities sale.

Series 63 Testing Point

To have a sale under the Uniform Securities Act, two elements are generally required:

1. A security

2. A transfer or disposition for value

Common exam traps include:

A useful memory aid is:

Security + Value = Sale
No security or no value = No sale.

Under the Uniform Securities Act, jurisdiction exists in any state where an offer is:

• Made

• Directed

• Accepted

In this case:

• The offer was made from Georgia.

• The offer was directed to Tennessee, where the client resides.

• The offer was accepted in North Carolina.

Therefore, the Administrators of all three states have jurisdiction over the transaction.

Why the Other Answers Are Incorrect

• Any answer excluding Georgia ignores the state from which the offer originated.

• Any answer excluding Tennessee ignores the state to which the offer was directed.

• Any answer excluding North Carolina ignores the state where the offer was accepted.

Series 63 Testing Point

For jurisdiction questions, always identify:

1. Where the offer was made

2. Where the offer was directed

3. Where the offer was accepted

The Uniform Securities Act grants jurisdiction to all three states, not just the state where the customer lives or where the transaction was completed. This is one of the most frequently tested Administrator authority concepts on the Series 63 exam.

Under the Uniform Securities Act, jurisdiction exists in any state where an offer is:

• Made

• Directed

• Accepted

In this case:

• The offer was made from Pennsylvania.

• The offer was directed into New Jersey.

Because the recommendation itself constitutes an offer, a violation may occur even though the client never purchased the security.

Why the Other Answers Are Incorrect

• Pennsylvania alone is incorrect because New Jersey also has jurisdiction as the state to which the offer was directed.

• New Jersey alone is incorrect because Pennsylvania has jurisdiction as the state from which the offer originated.

• A sale is not required for a violation involving an improper offer. The unlawful offer itself is sufficient.

Series 63 Testing Point

This is a very common exam trap:

An illegal offer can violate the Uniform Securities Act even if no sale ever occurs.

For jurisdiction questions, remember:

• Made from a state That state has jurisdiction.

• Directed into a state That state has jurisdiction.

• Accepted in a state That state has jurisdiction.

The exam frequently tests whether you understand that offers alone can trigger jurisdiction and violations, even when the customer never buys the security.

A stock dividend is not considered an offer or sale because shareholders receive the additional shares without providing any consideration. Since no value is exchanged, there is no offer or sale under the Uniform Securities Act.

Why the Other Answers Are Incorrect

• The exercise of a stock option involves acquiring securities and is treated as a sale.

• A purported gift of assessable stock is considered a sale because the recipient may incur future financial liability.

• The sale of subscription rights involves the transfer of a security for value and therefore constitutes a sale.

Series 63 Testing Point

A favorite NASAA distinction is:

Not a Sale

• Stock splits

• Stock dividends

Considered a Sale

• Sale of rights

• Sale of warrants

• Contracts of sale

• Contracts to sell

• Purported gifts of assessable stock

Memory Aid:

No consideration = generally no sale.

This is why stock splits and stock dividends are usually the correct answer when the exam asks what is not an offer or sale under the Uniform Securities Act.

A gift of nonassessable stock is simply a gift and is not considered a sale or an offer to sell because no value is exchanged and the recipient assumes no future financial liability.

Why the Other Answers Are Incorrect

• A warrant is considered both an offer and a sale of the underlying security.

• A stock dividend is excluded from the definition of a sale only when no payment is required. If a nominal payment is required, it becomes a sale.

• Securities given as a bonus in connection with the purchase of another security are considered part of the sale transaction.

Series 63 Testing Point

This is a highly tested NASAA distinction:

NOT a Sale

• Gift of nonassessable stock

• Stock dividend with no payment required

• Stock split

IS a Sale

• Gift of assessable stock

• Rights and warrants

• Bonus securities given with a purchase

• Stock dividends requiring any payment

Memory Aid

Nonassessable gift = true gift = not a sale

Assessable gift = recipient may owe money later = treated as a sale

The Uniform Securities Act excludes certain corporate reorganizations, such as mergers, from the definition of an offer to sell. When shareholders receive stock as part of a merger, there is no separate offer being made to dispose of securities for value.

However:

• Convertible securities are considered offers of the underlying security because investors may later convert them into stock.

• Stock rights are considered offers of the underlying stock because shareholders can pay money to acquire additional shares.

Why the Other Answers Are Incorrect

• Convertible securities are treated as offers of the underlying stock.

• Stock rights are treated as offers of the underlying stock.

• Therefore, only securities acquired through a merger are excluded.

Series 63 Testing Point

A common NASAA distinction is:

NOT an Offer to Sell

• Stock received in a merger

• Stock splits

• Certain corporate reorganizations

• Bona fide loans

IS an Offer to Sell

• Rights

• Warrants

• Convertible securities

• Any attempt to dispose of a security for value

Memory Aid

If the investor must pay money to obtain stock later, it is usually considered an offer of the underlying security.

That's why rights, warrants, and convertibles = offer to sell, while mergers and stock splits generally do not.

Under the Uniform Securities Act, an offer is considered made in a state when it originates in that state. An offer may also be considered made in a state if it is specifically directed into that state and received there.

However, the Act provides special exclusions for:

• Newspapers published outside the state

• Radio broadcasts originating outside the state

• Television broadcasts originating outside the state

These media communications alone do not cause an offer to be considered made in the state where they are received.

Why the Other Answers Are Incorrect

• An out-of-state newspaper delivered into the state is specifically excluded.

• An out-of-state radio or television broadcast is specifically excluded.

• Therefore, only the originating state clearly has jurisdiction based on the facts given.

Series 63 Testing Point

This is a classic NASAA jurisdiction question.

Offer Made In a State

• Originates in that state

• Directed into that state and received there

Not Considered Made In a State Solely Because Of

• Newspaper published outside the state

• Radio broadcast originating outside the state

• Television broadcast originating outside the state

Memory Aid

Originates = Jurisdiction

Out-of-state newspaper, radio, and TV = No jurisdiction by themselves

This is one of the most commonly tested exceptions to the normal "made, directed, or accepted" jurisdiction rules.