§ 25200 Out-Of-State Broker-Dealer Exemption

This law says a broker‑dealer that isn’t based in the state can skip the rules of Section 25210 as long as it only talks about buying or selling securities to certain big institutions or to 15 or fewer existing customers in the state each year.

Key Takeaways

•The exemption only works for broker‑dealers with no physical office in the state.
•Offers can be made to certain big institutions or to 15 or fewer existing customers each year.
•If more than 15 regular customers get offers, the broker‑dealer must follow Section 25210.

Example

A broker‑dealer in New York wants to sell a new stock to a pension fund in California and also to 10 of its current clients who already have accounts.

Because the broker‑dealer has no office in California and only talks to a pension fund (an allowed institution) and 10 existing customers (fewer than 15), it is exempt from Section 25210 for those offers.

How to Calculate

Exempt if (Number of non‑institutional customers offered securities in the state during any 12‑month period) ≤ 15

Count how many customers who are NOT one of the listed institutions received an offer in the state during the past 12 months.
Compare that count to the number 15.
If the count is 15 or less, the broker‑dealer is exempt; if it is more than 15, the exemption does not apply.

A broker‑dealer offered securities to 12 regular clients and 3 pension funds in the state over the last year.

Result: 12 ≤ 15, so the broker‑dealer qualifies for the exemption.

A broker-dealer registered under the Securities Exchange Act of 1934, who has not previously had any certificate denied or revoked under this law or any predecessor statute, shall be exempted from the provisions of Section 25210 if he has no place of business in this state and he does not direct offers to sell or buy into this state in any manner to persons other than broker-dealers, banks, savings and loan associations, trust companies, insurance companies, investment companies registered under the Investment Company Act of 1940, pension or profit-sharing trusts (other than self-employed individual retirement plans), or other institutional investors or governmental agencies or instrumentalities designated by rule of the commissioner, or to more than 15 other customers (whether or not self-employed individual retirement plans) having an existing account with such broker-dealer prior to any offer made to them in this state, during any period of 12 consecutive months, whether or not the offeror or any of the offerees is then present in this state. (Amended by Stats. 1978, Ch. 663.)

Key Takeaways

•The exemption only works for broker‑dealers with no physical office in the state.
•Offers can be made to certain big institutions or to 15 or fewer existing customers each year.
•If more than 15 regular customers get offers, the broker‑dealer must follow Section 25210.

Example

A broker‑dealer in New York wants to sell a new stock to a pension fund in California and also to 10 of its current clients who already have accounts.

How to Calculate

Exempt if (Number of non‑institutional customers offered securities in the state during any 12‑month period) ≤ 15

Count how many customers who are NOT one of the listed institutions received an offer in the state during the past 12 months.
Compare that count to the number 15.
If the count is 15 or less, the broker‑dealer is exempt; if it is more than 15, the exemption does not apply.

A broker‑dealer offered securities to 12 regular clients and 3 pension funds in the state over the last year.

Result: 12 ≤ 15, so the broker‑dealer qualifies for the exemption.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 25200 Out-Of-State Broker-Dealer Exemption

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References