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(7) The term “interstate commerce” means trade or commerce in securities or any transportation or communication relating thereto among the several States or between the District of Columbia or any Territory of the United States and any State or other Territory, or between any foreign country and any State, Territory, or the District of Columbia, or within the District of Columbia.

(8) The term "registration statement” means the statement provided for in section 6, and includes any amendment thereto and any report, document, or memorandum filed as part of such statement or incorporated therein by reference.

(9) The term "write" or "written" shall include printed, lithographed, or any means of graphic communication.

(10) The term "prospectus" means any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security; except that (a) a communication sent or given after the effective date of the registration statement (other than a prospectus permitted under subsection (b) of section 10) shall not be deemed a prospectus if it is proved that prior to or at the same time with such communication a written prospectus meeting the requirements of subsection (a) of section 10 at the time of such communication was sent or given to the person to whom the communication was made, and (b) a notice, circular, advertisement, letter, or communication in respect of a security shall not be deemed to be a prospectus if it states from whom a written prospectus meeting the requirements of section 10 may be obtained and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed, and contain such other information as the Commission, by rules or regulations deemed necessary or appropriate in the public interest and for the protection of investors, and subject to such terms and conditions as may be prescribed therein, may permit.

(11) The term “underwriter" means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. As used in this paragraph the term “issuer” shall include, in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.

(12) The term “dealer" means any person who engages either for all or part of his time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

(13) The term “insurance company” means a company which
is organized as an insurance company, whose primary and pre-
dominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies, and
which is subject to supervision by the insurance commissioner,
or a similar official or agency, of a State or territory or the
District of Columbia; or any receiver or similar official or any
liquidating agent for such company, in his capacity as such.

(14) The term “separate account” means an account estab-
lished and maintained by an insurance company pursuant to
the laws of any State or territory of the United States, the Dis-
trict of Columbia, or of Canada or any province thereof, under
which income, gains and losses, whether or not realized, from
assets allocated to such account, are, in accordance with the
applicable contract, credited to or charged against such ac-
count without regard to other income, gains, or losses of the
insurance company.
(15) The term "accredited investor" shall mean-

(i) a bank as defined in section 3(a)(2) of the Act whether
acting in its individual or fiduciary capacity; an insurance
company as defined in section 2(13) of the Act; an invest-
ment company registered under the Investment Company
Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the Small Business Administration;
or an employee benefit plan, including an individual re-
tirement account, which is subject to the provisions of the
Employee Retirement Income Security Act of 1974,2 if the
investment decision is made by a plan fiduciary, as defined
in section 3(21) of such Act, which is either a bank, insur-
ance company, or registered investment adviser; or

(ii) any person who, on the basis of such factors as finan-
cial sophistication, net worth, knowledge, and experience
in financial matters, or amount of assets under manage-
ment qualifies as an accredited investor under rules and
regulations which the Commission shall prescribe.

EXEMPTED SECURITIES

3
SEC. 3. [77c] (a) Except as hereinafter expressly provided, the
provisions of this title shall not apply to any of the following class-
es of securities:

(1) Reserved.

(2) Any security issued or guaranteed by the United States
or any Territory thereof, or by the District of Columbia, or by
any State of the United States, or by any political subdivision
of a State or Territory, or by any public instrumentality of one
or more States or Territories, or by any person controlled or
supervised by and acting as an instrumentality of the Govern-
ment of the United States pursuant to authority granted by
the Congress of the United States; or any certificate of deposit
for any of the foregoing; or any security issued or guaranteed
by any bank; or any security issued by or representing an in-
terest in or a direct obligation of a Federal Reserve bank; or
any interest or participation in any common trust fund or
similar fund maintained by a bank exclusively for the collec-
tive investment and reinvestment of assets contributed thereto
by such bank in its capacity as trustee, executor, administra-
tor, or guardian; or any security which is an industrial devel-
opment bond (as defined in section 103(c)(2) of the Internal
Revenue Code of 1954) 4 the interest on which is excludable
from gross income under section 103(a)(1) of such Code if, by
reason of the application of paragraph (4) or (6) of section
103(c) of such Code (determined as if paragraphs (4)(A), (5), and
(7) 5 were not included in such section 103(c)), paragraph (1) of
such section 103(c) does not apply to such security; or any in-
terest or participation in a single trust fund, or in a collective
trust fund maintained by a bank, or any security arising out of
a contract issued by an insurance company, which interest,
participation, or security is issued in connection with (A) a
stock bonus, pension, or profit-sharing plan which meets the
requirements for qualification under section 401 of the Inter-
nal Revenue Code of 1954,6 (B) an annuity plan which meets
the requirements for the deduction of the employer's contribu-
tions under section 404(a)(2) of such Code,' or (C) a governmen-
tal plan as defined in section 414(d) of such Code 8 which has
been established by an employer for the exclusive benefit of its
employees or their beneficiaries for the purpose of distributing
to such employees or their beneficiaries the corpus and income
of the funds accumulated under such plan, if under such plan
it is impossible, prior to the satisfaction of all liabilities with
respect to such employees and their beneficiaries, for any part
of the corpus or income to be used for, or diverted to, purposes
other than the exclusive benefit of such employees or their
beneficiaries, other than any plan described in clause (A), (B),
or (C) of this paragraph (i) the contributions under which are
held in a single trust fund or in a separate account maintained
by an insurance company for a single employer and under
which an amount in excess of the employer's contribution is al-
located to the purchase of securities (other than interests or
participations in the trust or separate account itself) issued by
the employer or any company directly or indirectly controlling,
controlled by, or under common control with the employer, (ii)
which covers employees some or all of whom are employees
within the meaning of section 401(c)(1) of such Code, or (iii)
which is a plan funded by an annuity contract described in sec-
tion 403(b) 9 of such Code. The Commission, by rules and regulations or order, shall exempt from the provisions of section 5 of this title any interest or participation issued in connection with a stock bonus, pension, profit-sharing, or annuity plan which covers employees some or all of whom are employees within the meaning of section 401(c)(1) of the Internal Revenue Code of 1954, if and to the extent that the Commission determines this to be necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title. For purposes of this paragraph, a security issued or guaranteed by a bank shall not include any interest or participation in any collective trust fund maintained by a bank; and the term “bank” means any national bank, or any banking institution organized under the laws of any State, territory, or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official; except that in the case of a common trust fund or similar fund, or a collective trust fund, the term “bank” has the same meaning as in the Investment Company Act of 1940;

2 29 U.S.C. 1001 et seq. [Printed in appendix to this volume.)
3 Additional exemptions contained at: 7 U.S.C. 1932(d)6); 12 U.S.C. 1455, 1717, 1719, 1723c; 15
U.S.C. 77c, note; 20 U.S.C. 1087-2, 1087hh; 22 U.S.C. 283(h), 285h, 286k-1, 290i-9; 43 U.S.C. 1625;
and 45 U.S.C. 120. [Printed in appendix to this volume except for 7 U.S.C. 1932(d)(6) and 15
U.S.C. 77c.]

Section 103(c) of the Internal Revenue Code of 1954 redesignated as section 103(b) by section
1901(aX17) of Pub. L. 94-455 (26 U.S.C. 103(b)). (Printed in appendix to this volume.)

5 Paragraph (7) redesignated as paragraph (13) (26 U.S.C. 103(b)(13)). (Printed in appendix to
this volume.)

6 26 U.S.C. 401. (Printed in appendix to this volume.)
7 26 U.S.C. 404(a)(2). [Printed in appendix to this volume.)
8 26 U.S.C. 414(d). (Printed in appendix to this volume.)

(3) Any note, draft, bill of exchange, or banker's acceptance which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited;

(4) Any security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual;

(5) Any security issued (A) by a savings and loan association, building and loan association, cooperative bank, homestead association, or similar institution, which is supervised and examined by State or Federal authority having supervision over any such institution; or (B) by (i) a farmer's cooperative organization exempt from tax under section 521 of the Internal Revenue Code of 1954,10 (ii) a corporation described in section 501(c)(16) of such Code 11 and exempt from tax under section 501(a) of such Code, or (iii) a corporation described in section 501(c)(2) of such Code which is exempt from tax under section 501(a) of such Code and is organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization or corporation described in clause (i) or (ii);

(6) Any interest in a railroad equipment trust. For purposes of this paragraph “interest in a railroad equipment trust” means any interest in an equipment trust, lease, conditional sales contract, or other similar arrangement entered into, issued, assumed, guaranteed by, or for the benefit of, a common carrier to finance the acquisition of rolling stock, including motive power;

9 26 U.S.C. 403(b). [Printed in appendix to this volume.) 10 26 U.S.C. 521. [Printed in appendix to this volume.) 11 26 U.S.C. 501(cX16). [Printed in appendix to this volume.]

(7) Certificates issued by a receiver or by a trustee in bankruptcy, with the approval of the court;

(8) Any insurance or endowment policy or annuity contract or optional annuity contract, issued by a corporation subject to the supervision of the insurance commissioner, bank commissioner, or any agency or officer performing like functions, of any State or Territory of the United States or the District of Columbia;12

(9) Any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange;

(10) Any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court, or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval;

(11) Any security which is a part of an issue offered and sold only to persons resident within a single State or Territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incorporated by and doing business within, such State or Territory. 12 (b) The Commission may from time to time by its rules and regulations, and subject to such terms and conditions as may be prescribed therein, add any class of securities to the securities exempted as provided in this section, if it finds that the enforcement of this title with respect to such securities is not necessary in the public interest and for the protection of investors by reason of the small amount involved or the limited character of the public offering; but no issue of securities shall be exempted under this subsection where the aggregate amount at which such issue is offered to the public exceeds $5,000,000.

(c) The Commission may from time to time by its rules and regulations and subject to such terms and conditions as may be prescribed therein, add to the securities exempted as provided in this section any class of securities issued by a small business investment company under the Small Business Investment Act of 1958 13 if it finds, having regard to the purposes of that Act, that the enforcement of this Act with respect to such securities is not necessary in the public interest and for the protection of investors.

12 But see section 24(d) of the Investment Company Act of 1940, infra. 13 15 U.S.C. 661 et seq.

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