Transactions with existing securities holders are exempt if which condition is met?

• A. No commissions are paid
• B. A commission is paid
• C. The offering is publicly advertised
• D. The issuer is a non-profit organization

Answer: (A)

The main concept here is that transfers to existing security holders can be exempt from registration only when there is no broker involvement in the sale. Specifically, if no commissions are paid to brokers or solicitors, the transaction can qualify as an exemption because it’s not a public or broker-facilitated offering.

Why this is the best answer: If a commission is paid, the sale would involve broker-dealer activity and would generally fall outside this exemption, since it resembles a facilitated or public-like offering rather than a simple transfer among existing holders. Public advertising would indicate a general solicitation, which also disqualifies the exemption. The issuer being a nonprofit does not affect the exemption for existing holders.

So, the condition that fits is that no commissions are paid.