Which of the following is NOT exempt under the Securities Act of 1933?

• A. A security issued by the US government
• B. Any commercial paper with maturity no more than 270 days
• C. An interest in Railroad Trust
• D. A private company’s non-exempt stock offering

Answer: (D)

Not all securities need to be registered before sale. Some are exempt because of who issues them or the nature of the instrument, which reduces the need for the broad disclosures required by registration. Government securities are exempt, since they’re backed by the U.S. government. Short-term commercial paper with a maturity of 270 days or less is exempt because it’s considered high-quality, short-term debt. Interests in railroad trusts are exempt as well, since they’re issued through a trust structure that falls under a recognized exemption.

A private company’s stock sale that isn’t exempt falls outside these categories. Private company stock typically must be registered unless it qualifies for a specific exemption (for example, Regulation D), and a non-exempt private offering would require registration. So the only option that is not exempt is the private company’s non-exempt stock offering.