12.1 Broker-Dealer Definition and Registration
Broker-dealers and their registered agents are regulated under the Uniform Securities Act to protect public investors from fraudulent execution and capitalization insolvency.
Key NASAA Exam Takeaways
- A Broker-Dealer (BD) is any person engaged in the business of effecting securities transactions for the accounts of others (broker) or for its own account (dealer).
- Exclusions from BD definition: Agents, issuers, banks/trust companies, and BDs with NO place of business in the state whose only clients are institutional.
- THERE IS NO DE MINIMIS EXEMPTION FOR BROKER-DEALERS: Having even 1 retail client in a state triggers full BD registration if the BD has no place of business.
- Agents are natural persons representing BDs or issuers in effecting securities transactions. Unregistered clerical and ministerial personnel are excluded.
- When an Agent terminates employment, ALL THREE parties must notify the Administrator: the Agent, the Old BD, and the New BD (if transferring).
Knowledge Checkpoint • Section 12.1
An out-of-state broker-dealer with no physical office in State X conducts business with 3 existing retail clients who are vacationing in State X for the winter. Is the broker-dealer required to register in State X?