Your customer crosses a state line, but your registration does not automatically follow. Before taking the next order, you must identify your role, the relevant state, and any applicable exclusion.
A brokerage office needs people to solicit purchases, accept orders, and maintain records. Registration follows what those people actually do. Under the Uniform Securities Act of 1956, as amended, job titles alone do not determine who must register. The Administrator is the state securities regulator responsible for administering the Act.
A broker-dealer conducts securities business for customers or its own account. An issuer creates and issues securities, such as a company issuing its shares. An agent is an individual, other than a broker-dealer, who represents a broker-dealer or issuer in securities purchases or sales. The definition includes effecting transactions and attempting to effect them (§401(b)). You can therefore become an agent by soliciting a purchase even when the prospect declines.
A partner, officer, director, or person performing similar functions becomes an agent only when the person's activities meet that definition.
Common mistakes
- Treating a $50,000 total purchase as sufficient for commercial paper issued in $25,000 denominations. Test each denomination, along with maturity and rating.
- Treating salary-only compensation as a universal exclusion. A salaried broker-dealer salesperson can still require agent registration.
- Choosing five clients as an agent-registration threshold. The adviser de minimis provision does not supply that allowance.
Bottom line
- Agent status follows securities transaction activity; titles and salary alone do not control.
- Issuer exclusions cover specified securities, transactions, federal covered offerings, and qualifying uncompensated solicitations of existing insiders.
- Broker-dealer agents generally register in each relevant state; the adviser five-client exemption does not apply.
- Federal customer relief requires local firm registration and the applicable relationship or pending-application conditions.
Exam shortcut
Circle whom you represent before reading an exemption answer. An issuer fact can change the result even when the security and customer stay identical. Underline the event starting each clock. Label it filing, amendment, discovery, disqualification, termination, or extended stay before choosing a number. For traveling customers, test one federal route completely. Do not combine the account requirement from one route with a convenient deadline from the other.
The full lesson (about 4,262 words, 28 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- D22
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