Finra Exam SIE Topic 6 Question 1 Discussion

SEC Regulation A provides a registration exemption for smaller public offerings but includes a 'bad actor' disqualification. If certain key parties, such as the issuer, underwriter, or affiliates, have been involved in securities violations, the exemption is forfeited.

B is correct because underwriters are considered essential participants, and their status as bad actors disqualifies the offering.

A, C, and D are incorrect because custodians, transfer agents, and clearing corporations are not included in the 'bad actor' provisions of Regulation A.