In order to understand why this is wrong, you first have to understand what the terms “exempt” and “non-exempt” mean and why they’re important. A security that is exempt is one that is not required to be registered with the State and/or the SEC, whereas a non-exempt security is, you guessed it, required to be registered with the State and/or the SEC before it can be sold.
Psst! Hey there, I got me a non-exempt security here…it’s not registered, man, so it’s like completely hot, but ...
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