In my experience, many securities lawyers are well versed in the federal securities laws, but have little experience with state securities laws. This is understandable because federal law in many cases preempts state qualification/registration requirements, even with respect to offerings that are exempt from registration under the Securities Act of 1933. For those looking for a quick and easy summary of which exempt offerings are potentially subject, I recently came across the following table on the SEC’s website:
| Securities Act Exemption | Under the Securities Act, is the offering potentially subject to state registration or qualification? |
|---|---|
| Section 4(a)(2) | Yes |
| Rule 506(b) | No |
| Rule 506(c) | No |
| Rule 504 | Yes |
| Regulation Crowdfunding | No |
| Regulation A – Tier 1 | Yes |
| Regulation A – Tier 2 | No |
| Rules 147 and 147A | Yes |
| Rule 701 | Yes |
Note that the table uses the terminology “potentially subject”. It is possible that these offerings are also exempt under state law. For example, it is common for issuers to rely on the exemption from qualification in California Corporations Code Section 25102(o) in Rule 701 offerings. However, compliance with Rule 701 does not automatically meet the conditions of the Section 25102(o) exemption.
It is also important to understand that an offering that is not subject to state registration or qualification requirements is not subject to other state securities law requirements. For example, California and other states require a notice filing in respect of offerings made in reliance upon Rule 506. See Cal. Corp. Code § 25102.1. These offerings may also be subject to state securities fraud prohibitions.