Are CMOs exempt from registration under the Securities Act of 1933?

Collateralized Mortgage Obligations (CMOs) are considered securities under the Securities Act of 1933 and, as such, are generally required to be registered with the SEC unless an exemption applies. This requirement applies because CMOs are structured products that involve the pooling of mortgage loans and issuing securities backed by the cash flows from those loans.

The registration process is essential as it helps ensure that investors receive full disclosure about the risks and rewards involved in the investment. While there are certain exemptions available for some types of securities, CMOs do not fall under those categories and therefore must undergo the registration process before being offered for sale to investors. Understanding this aspect is crucial for comprehending the regulatory framework governing securities and the protections afforded to investors in such offerings.