State registration by qualification is a process that allows a security to be sold in a state. Which statement is true?

• A. It requires filing registration with the SEC
• B. The state registration becomes effective when the Administrator orders it
• C. It does not require disclosure
• D. It is only available for securities already registered with the Federal government

Answer: (B)

State registration by qualification is a process where a security being offered in a state must be registered with that state's securities administrator. The crucial point is that the registration becomes effective only when the Administrator issues an order—setting the effective date after review and any required disclosures. This process isn’t filed with the SEC, and while the issuer must provide information, the timing hinges on the Administrator’s order. It isn’t limited to securities already registered with the federal government, so that statement is incorrect. Thus, the true statement is that the state registration becomes effective when the Administrator orders it.