How is a non-exempt security categorized in terms of state registration?

A non-exempt security must be registered in every state in which it is offered or sold to potential investors. This requirement is in place because non-exempt securities do not qualify for any of the exemptions from registration that may apply under state laws. Registration serves to provide state regulators with information about the company issuing the security, ensuring full disclosure to potential investors and helping to protect them from fraudulent practices.

While some securities can be exempt from the registration requirement based on specific conditions or statutes, non-exempt securities do not fall into those categories and therefore require full compliance with state registration laws. This includes the submission of a registration statement and payment of any associated fees in each state where the security is to be sold.

This understanding establishes a clear distinction between exempt and non-exempt securities, emphasizing the critical role of state registration in maintaining investor protection standards.