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Series 65
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Introduction
1. Investment vehicle characteristics
2. Recommendations & strategies
3. Economic factors & business information
4. Laws & regulations
4.1 Securities laws
4.2 Definitions
4.2.1 Persons
4.2.2 Exempt & excluded
4.2.3 Issuers & securities
4.2.4 Broker-dealers
4.2.5 Agents
4.2.6 Investment advisers
4.2.7 Investment adviser representatives (IARs)
4.2.8 SEC & state administrator
4.2.9 Offers & sales
4.3 Registration
4.4 Enforcement
4.5 Communications
4.6 Ethics
Wrapping up
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4.2.1 Persons
Achievable Series 65
4. Laws & regulations
4.2. Definitions

Persons

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Definitions matter on exams that test legal aspects of finance. When a regulation or rule applies only to a specific entity, item, or circumstance, you need the exact definition of key terms to decide whether the law applies.

A simple example is a highway speed limit that applies to “automobiles.” That sounds straightforward - until you ask what counts as an automobile. Does an ambulance qualify? A fire truck? A motorized skateboard? Legal questions often turn on that kind of definition.

One of the first definitions to know is the term ‘person.’

Definitions
Person
An individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity

In everyday English, “persons” usually means people you know - friends, family, coworkers. In legal and regulatory questions, though, don’t assume “person” means a natural person (a.k.a. a human being). While you are a person, so is the U.S. Government, and so is a large corporation.

A useful way to think about it is this: a person can be a human being or a legal entity that can enter into legal contracts.

Definitions
Legal contract
A mutual agreement between two or more parties that is enforceable by law.

Examples: employment contracts, insurance contracts, option contracts

There are some important examples of non-persons to be aware of. The following parties are never considered persons:

  • Minors
  • Incapacitated
  • Deceased

A common reason for non-person status is the inability to enter into legally binding contracts.

  • Minors: While minors can technically enter into contracts, those contracts are generally unenforceable, and the minor can void the contract at any time.
  • Incapacitated: Incapacitation occurs when someone is unable to manage their own affairs or well-being. This also prevents them from entering binding contracts. Common reasons include dementia, mental illness, and a sustained lack of consciousness (e.g. in a coma).
  • Deceased: Deceased individuals can’t enter into contracts.

Person

  • Any natural person (human being), or;
  • Any legal entity

Non-persons

  • Minors
  • Incapacitated
  • Deceased

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Next  | 4.2.2 Exempt & excluded
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Persons

Definitions matter on exams that test legal aspects of finance. When a regulation or rule applies only to a specific entity, item, or circumstance, you need the exact definition of key terms to decide whether the law applies.

A simple example is a highway speed limit that applies to “automobiles.” That sounds straightforward - until you ask what counts as an automobile. Does an ambulance qualify? A fire truck? A motorized skateboard? Legal questions often turn on that kind of definition.

One of the first definitions to know is the term ‘person.’

Definitions
Person
An individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity

In everyday English, “persons” usually means people you know - friends, family, coworkers. In legal and regulatory questions, though, don’t assume “person” means a natural person (a.k.a. a human being). While you are a person, so is the U.S. Government, and so is a large corporation.

A useful way to think about it is this: a person can be a human being or a legal entity that can enter into legal contracts.

Definitions
Legal contract
A mutual agreement between two or more parties that is enforceable by law.

Examples: employment contracts, insurance contracts, option contracts

There are some important examples of non-persons to be aware of. The following parties are never considered persons:

  • Minors
  • Incapacitated
  • Deceased

A common reason for non-person status is the inability to enter into legally binding contracts.

  • Minors: While minors can technically enter into contracts, those contracts are generally unenforceable, and the minor can void the contract at any time.
  • Incapacitated: Incapacitation occurs when someone is unable to manage their own affairs or well-being. This also prevents them from entering binding contracts. Common reasons include dementia, mental illness, and a sustained lack of consciousness (e.g. in a coma).
  • Deceased: Deceased individuals can’t enter into contracts.
Key points

Person

  • Any natural person (human being), or;
  • Any legal entity

Non-persons

  • Minors
  • Incapacitated
  • Deceased

More from Definitions

Exempt & excluded
  • Issuers & securities
  • Broker-dealers
  • Agents
  • Investment advisers