If an issuer offers federal covered security in a state, the state administrator may issue a stop order suspending the offer and sale.
Federal covered security is one that is exempt from state securities registration under federal law. Security is a covered security if it is offered or sold to qualified buyers, as that term is defined by the rule of the Commission. The Internal Revenue Service (IRS) and you, the asset's owner, must be informed of the cost basis of covered securities by the broker. Various kinds of stocks, notes, bonds, commodities, and mutual fund shares are among them. To qualify, covered securities must be purchased after a specific date. The rules governing covered securities are made clearer by the National Securities Market Improvement Act.
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