S63 Ch. 1 Regulation of Broker Dealers and Agents

broker dealer doing business intrastate and does not trade on national exchanges

only need to register in single state

broker dealer doing business interstate and state exclusions apply

registers with SEC but no registration is required in state where business is conducted

broker dealer doing business interstate and no state exclusions apply

registers with both SEC and in all states where business is conducted

broker dealer state registration exceptions

agents, issuer of securities, banks, trusts, savings institutions, and credit unions

broker dealers registration requirements

if BD has an office in the state and 1+ resident retail clients in state

agent

any natural persons representing either a BD or an issuer effecting or attempting to effect securities transactions

customer relocation agent protocol

agent can do business for < 60 days before registration is required if pursuing registration, agent must file registration 10 business days after the later of the date they learned the client relocated or the date the customer requested a trade from a new state

agent registration required

originates, directs, or receives & accepts an offer from a state (based only on offers, not retail v. institutional clients)

transactions that are not offers or sales

securities pledged or loaned and stock dividend distributions

ministerial (clerical) actions

acts without personal judgment or discretion: providing quotes, cold calling for making appointments or providing information, preparing routine written correspondence, assisting with research

non-ministerial actions

handling customer orders or transactions

agent registration exemption for employees of issuers

if representing issuer in transactions of one of the 5 exempt securities, in exempt transactions, and in transactions limited to issuer’s employees and without compensation

broker dealer registration process

Form BD, filing fee, consent to service of process, publish announcement of registration in a newspaper, and meet minimum financial, bonding and recordkeeping requirements

effective noon 30 days after filing, renewed Dec 31st

agent registration process

Form U-4, consent to service of process, pay filing fees, possible bonding requirement

effective 30 days after filing at noon, renewed Dec 31st

effecting securities transactions for agents

when offers and sales are made, including sweeteners, gifts of assessable stock, warrants and rights

Canadian registration

Canadian firms can do business with limited registration with temporary Canadian visitors to the state, Canadian residents of the state for Canadian tax advantaged retirement plans

must renew by Dec 1st each year

successor BD registration

must meet state registration requirements, and an application for registration must be filed for the unexpired portion of the year but no filing fees required (can be made even if succesor firm doesn’t legally exist yet)

BD record maintenance

3 year retention, can be kept electronically if admin can access, view and print and protected against altering/loss