Indiana, Ohio, Michigan, and Illinois.
Since ABC Securities is located in Indiana, it must be registered in Indiana. ABC also has non-institutional clients in Ohio and must register there. Even though James only accepts unsolicited orders from clients in Michigan, he is still defined as an agent. As such, both James and ABC must register in Michigan. Since James does business with existing clients who are only temporarily in Illinois on vacation, he is not defined as an agent in Illinois. However, in order to claim this exception from the definition of agent, James must not be ineligible to register in Illinois, he must be registered with FINRA and at least one state, and his firm must be registered in Illinois. [Module 1, Uniform Securities Act, Sections 3.3, 3.4, & 3.9]
An investment contract.
An investment contract is a security, because it is a contract between the issuer and the investor. As an example, think of purchasing mutual funds. These are a form of an investment contract. Retirement accounts may contain securities, but are not securities themselves. A commodity futures contract is not a security, but a commodity option contract is a security. Note the difference. A commodity futures contract is an actual obligation to buy or sell the commodity. The contract is not a security, but a guaranteed set price. A commodity option contract provides the holder with an opportunity to exercise the contract, but not a requirement. Futures contracts are always executed, after which time the holder owns the commodity (pork bellies, orange juice, foreign currency, for example) as of the date the futures contract expires. A commodity option contract is an opportunity to purchase or sell these commodities, but is not a definite outcome. The holder of an option can choose to let the option expire, whereas a futures is always executed. Lastly, an insurance endowment policy is not a security. A security is a situation where a person invests in a common enterprise with the expectation of making a profit from the management efforts of others. [Module 1, Uniform Securities Act, Section 3.1]
I. A client selling shares in the open market
II. The sale of an issuer's stock to the issuer's qualified pension plan, executed in the OTC secondary market
As the name implies, a nonissuer transaction is one that does not give the issuer any compensation, either directly or indirectly. Clients selling their shares on the open market do not involve the issuer of that security in any way. In addition, the sale of stock to an issuer's pension plan in the OTC secondary market is not an issuer transaction, because a selling stockholder (or stockholders) will receive the sale's funds. The sale of stock pursuant to an underwriting agreement means that it is a primary market offering and the issuer will receive the funds. The placement of treasury stock into the employee pension plan is an indirect method of compensation. The company receives service from its employees, and in exchange, funds a retirement plan. For this reason, the company is indirectly paid for the shares; therefore, this is considered an issuer transaction. For a transaction to be an issuer transaction, the issuer must receive the proceeds of the sale or in some other direct or indirect manner, benefit from the sale or gifting of the securities. [Module 1, Uniform Securities Act, Section 3.2]