What is a Broker-Dealer? - Davis Polk & Wardwell

§ 1A:1.4 BROKER-DEALER REGULATION
regulatory authority subject to certain exemptions in the case of the
2002 Act. 36
In the National Securities Markets Improvement Act of 1996
(NSMIA), Congress preempted certain aspects of state regulation
of broker-dealer operations. 37 NSMIA added section 15(h) to the
least $50,000, and receives a rating in one of the three highest rating
categories from a nationally recognized statistical rating organization;
or a renewal of such an obligation that is likewise limited, or a
guarantee of such an obligation or of a renewal; and
• any investment contract issued in connection with an employees’ stock
purchase, savings, pension, profit-sharing, or similar benefit plan if the
Administrator is notified in writing thirty days before the inception of
the plan or, with respect to plans which are in effect on the effective
date of this act, within sixty days thereafter (or within thirty days before
they are reopened if they are closed on the effective date of this act).
In addition, “Agent” does not include (i) an individual who represents
an issuer in effecting transactions exempted by section 402(b), which
includes exemptions for private placements, institutional sales and for
various categories of “non-issuer” transactions or (ii) effecting transactions
with existing employees, partners or directors of the issuer if no commission
or other remuneration is paid or given directly or indirectly for
soliciting any person in this state. A partner, officer, or director of a
broker-dealer or issuer, or a person occupying a similar status or performing
similar functions, is an agent only if he otherwise comes within this
definition.
“Agent” is defined in section 102 of the 2002 Uniform Securities Act as
“an individual, other than a broker-dealer, who represents a broker-dealer
in effecting or attempting to effect purchases or sales of securities or
represents an issuer in effecting or attempting to effect purchases or sales
of the issuer’s securities. But a partner, officer, or director of a broker-dealer
or issuer, or an individual having a similar status or performing similar
functions is an agent only if the individual otherwise comes within the
term. The term does not include an individual excluded by rule adopted or
order issued under this [Act].”
36. See Uniform Securities Act of 1956 § 201; Uniform Securities Act of 2002
§ 401. Section 401 of the Uniform Securities Act of 2002 provides two
exemptions: (i) a broker-dealer without a place of business in the state does
not have to register if its only transactions effected in the state with certain
defined categories of persons; and (ii) a person that deals solely in the U.S.
government securities and is supervised as a dealer in government securities
by the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
or the Office of Thrift Supervision is exempted from the registration
requirement. In addition, the 2002 Uniform Securities Act provides that
pursuant to a rule or order issued under the act a foreign broker-dealer may
be exempt under certain conditions. For examples of state registration
requirements, see CAL. CORP. CODE § 25210 (2009); CONN. GEN. STAT.
§ 36B-6 (2008); FLA. STAT. § 517.12 (2009).
37. National Securities Markets Improvement Act of 1996, Pub. L. No.
104-290, 110 Stat. 3416 (1996).
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