Non-issuer transaction

The Uniform Securities Act defines a non-issuer transaction as any sale of a security where the issuing company gets none of the money. When you buy 100 shares of an established company through your brokerage account, the seller is another investor, and the cash goes to that seller — the company's balance sheet is unaffected. That is a non-issuer transaction, and it describes the overwhelming majority of daily trading volume.

An issuer transaction is the opposite: the company itself sells newly created securities and keeps the proceeds. Initial public offerings, follow-on offerings, and private placements sold directly by the company are all issuer transactions. The distinction is about where the money lands, not about who executes the trade, so a sale by a large founding shareholder is still a non-issuer transaction even though it may look like a corporate event.

State securities law cares about this line because several exemptions from registration are written around it. The Uniform Securities Act exempts an isolated non-issuer transaction — a rare, one-off private sale rather than a repeated pattern — and also exempts many non-issuer transactions in securities of seasoned issuers whose financial information is published in a recognized securities manual. Because these are transaction exemptions, they attach to the trade itself, not to the security, so the same stock can be sold in an exempt transaction one day and a non-exempt one the next.

Non-issuer transactions come up constantly on the Series 63, Series 65, and Series 66 exams, which test exempt securities, exempt transactions, and the mechanics of secondary market trading under state law.