What is a Broker-Dealer? - Davis Polk & Wardwell
What is a Broker-Dealer? - Davis Polk & Wardwell
What is a Broker-Dealer? - Davis Polk & Wardwell
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§ 1A:7.6 BROKER-DEALER REGULATION<br />
Company Act; or (iii) a trust or other donative instrument or the<br />
settlors (or potential settlors) or beneficiaries of such a trust or other<br />
instrument. 448 Th<strong>is</strong> exemption <strong>is</strong> not available to any charitable<br />
organization, or any trustee, director, officer, employee, or volunteer<br />
of such a charitable organization, unless each person who solicits<br />
donations on behalf of such charitable organization from any donor to<br />
a fund that <strong>is</strong> excluded from the definition of an investment company<br />
under section 3(c)(10)(B) of the Investment Company Act, <strong>is</strong> either a<br />
volunteer or <strong>is</strong> engaged in the overall fund-ra<strong>is</strong>ing activities of a<br />
charitable organization and receives no comm<strong>is</strong>sion or other special<br />
compensation based on the number or the value of donations collected<br />
for the fund. 449<br />
§ 1A:7.6 Associated Persons of Reg<strong>is</strong>tered<br />
<strong>Broker</strong>-<strong>Dealer</strong>s<br />
[A] Section 15(a)(1)<br />
Absent an exemption, a person engaged in broker or dealer activities<br />
has to reg<strong>is</strong>ter with the SEC in accordance with section 15(b). Section<br />
15(a), however, does not require a natural person who <strong>is</strong> associated<br />
with a Reg<strong>is</strong>tered <strong>Broker</strong>-<strong>Dealer</strong> to reg<strong>is</strong>ter when he or she engages in<br />
securities transactions as a broker-dealer. 450 A “person associated with<br />
a broker or dealer” or “associated person of a broker or dealer” includes<br />
any partner, officer, director, or branch manager of such broker or<br />
dealer (or any person occupying a similar status or performing<br />
similar functions), any person directly or indirectly controlling, controlled<br />
by, or under common control with such broker or dealer, or any<br />
employee of such broker or dealer, except that any person associated<br />
with a broker-dealer whose functions are solely clerical or min<strong>is</strong>terial.<br />
451 While exempted from reg<strong>is</strong>tering with the SEC, with certain<br />
exceptions associated persons must reg<strong>is</strong>ter with an SRO via the firm<br />
with which they are associated and be subject to the superv<strong>is</strong>ion and<br />
control of such firm. 452 Of course, the broker-dealer with whom the<br />
natural person <strong>is</strong> associated must reg<strong>is</strong>ter with the SEC, absent an<br />
exemption.<br />
448. Exchange Act § 3(e)(1).<br />
449. Exchange Act § 3(e)(2).<br />
450. Exchange Act § 15(a)(1). A natural person who <strong>is</strong> not associated with a<br />
reg<strong>is</strong>tered broker-dealer will still have to reg<strong>is</strong>ter pursuant to Section 15(b).<br />
451. Exchange Act § 3(a)(18).<br />
452. See, e.g., NASD Rule 1032 (concerning reg<strong>is</strong>tration of representatives) and<br />
NASD Rule 3010 (concerning superv<strong>is</strong>ion).<br />
1A–102