What is an ineligible issuer under the SEC?
Asked by: Miss Clemmie Hamill | Last update: February 3, 2026Score: 4.7/5 (65 votes)
An SEC ineligible issuer is a company disqualified from certain streamlined registration benefits (like using Form S-3 or WKSI status) due to past violations, such as certain felony convictions, anti-fraud violations, bankruptcy filings, or failure to file required reports, essentially signaling higher risk to investors. This status prevents them from using fast-track SEC processes, requiring more traditional, rigorous registration and disclosure, though waivers are sometimes possible for good cause.
What is an ineligible issuer?
In order to qualify as a WKSI, an issuer may not be an “ineligible issuer.” Rule 405 of the Securities Act defines an “ineligible issuer” to be, among other things, an issuer that has been convicted of a felony or misdemeanor specified in certain enumerated provisions under Section 15 of the Exchange Act or an issuer ...
What are ineligible securities?
Ineligible Securities means any obligations, securities, certificates or instruments that (i) are denominated in a currency other than U.S. Dollars, (ii) are issued other than in Federal Reserve book entry form, or (iii) constitute or include structured notes or other structured debt instruments, real estate mortgage ...
What is the definition of an issuer in the SEC?
(8) The term “issuer” means any person who issues or proposes to issue any security; except that with respect to certificates of deposit for securities, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a ...
Are non-issuer transactions exempt?
Understanding Non-Issuer Transactions
Isolated non-issuer transactions are exempt from the registration requirements of the Securities and Exchange Commission (SEC). For instance, if Joe sells 100 shares of XYZ stock to his brother, this transaction would be exempt from registration requirements.
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What does non-issuer mean?
Non-issuers are people or companies that do not issue securities and have no plans to issue securities.
What is an example of a non-issuer transaction?
Example of a Non-Issuer Transaction
You bought these shares from the market, not directly from the company, so even your original purchase was a non-issuer transaction. Now, a year later, you decide you want to sell your shares. You find a buyer (another investor), and you sell your shares to them.
Who are issuers and non-issuers?
Issuer: These are public companies that issue securities and file with the SEC. The audit is a requirement by law. Non-issuer: These are private companies and do not issue securities or file with the SEC.
Who qualifies as an issuer of securities?
Issuers of securities may be corporations, investment trusts, or a government body. The entity must benefit directly or indirectly from the sale of the securities. A non-issuer transaction is one in which the entity or individual selling the security does not benefit from the sale proceeds directly or indirectly.
Who is considered the issuer?
Issuer generally refers to any person or entity that creates, or proposes to create, a security. Federal law provides specific definitions for certain financial instruments as exceptions.
What are the five exempt securities?
National foreign government securities. Bank securities. Insurance company securities. Railroad, common carrier, and public utility securities.
What does an ineligible account mean?
More Definitions of Ineligible Account
Ineligible Account means any Account that does not constitute an Eligible Account due to the operation of any Ineligible Account Clause.
What are the 4 types of securities?
The four main types of securities are Equity (ownership like stocks), Debt (loans like bonds), Hybrid (mix of equity/debt like convertible bonds), and Derivative (based on underlying assets like options). These categories represent ownership, borrowing, a blend, and contracts on other assets, allowing investors to gain exposure to different financial markets.
What companies are exempt from SEC registration?
Federal exempt securities
- Not required to register in any circumstance.
- List: Government securities. Insurance company securities (unless a variable contract) Bank securities (not bank holding company securities) Non-profit securities. Commercial paper and banker's acceptances. Railroad ETCs.
What is the SEC Rule 477?
Securities and Exchange Commission
Rule 477 (17 CFR 230.477) under the Securities Act of 1933 (15 U.S.C. 77a et seq.) sets forth procedures for withdrawing a registration statement, including any amendments or exhibits to the registration statement.
What is an affiliate under the SEC rules?
The term “affiliate” is defined in Rule 405 promulgated under the Securities Act of 1933 as “a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified”.
How to determine if a security is DTC eligible?
Eligibility requirements include that the securities must be; issued in a transaction registered with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”); or issued in a transaction exempt from registration pursuant to a '33 Act exemption, that ...
When an issuer shall not be eligible to make an IPO?
if any of the promoters or directors of the issuer is a promoter or director of any other company which is debarred from accessing the capital market by the Board. if the issuer or any of its promoters or directors is a wilful defaulter. if any of its promoters or directors is a fugitive economic offender.
Is unqualified for issuers?
Issuers (public companies) receive unqualified audit opinions while nonissuers (private companies) would receive unmodified opinions. The requirements for the audit report vary between the two types of audit opinions.
What are the 4 types of audits?
The four common types of audits are Financial, focusing on financial statements; Operational, reviewing efficiency; Compliance, checking adherence to rules; and Internal, assessing internal controls for improvement, with forensic and IT audits also being key categories, all leading to different audit opinions like Unqualified, Qualified, Adverse, or Disclaimer.
Is Capital One an issuer or acquirer?
For example, Capital One is a credit card issuer that works with the networks Mastercard and Visa.
What is a non-exempt issuer?
Non-exempt issuers are smaller issuers with lower levels of net tangible assets, cash flow or profit. Once listed, these issuers are subject to closer TSX regulatory scrutiny and escrow requirements.
Which of the following is not an issuer under the Uniform Securities Act?
A broker/dealer that trades securities as an agent for its clients is not acting in the capacity of an issuer.
Who is an issuer of securities?
An issuer, such as a public company, develops and sells securities to raise the capital it needs to finance its business operations. 1 Corporations, investment trusts, and governments can be issuers of securities such as equity, bonds, and warrants.