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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<strong>What</strong> Is a <strong>Broker</strong>-<strong>Dealer</strong>? § 1A:2.6<br />
(i) the transaction and its related activities are one-time extraordinary<br />
events;<br />
(ii) the call center personnel are compensated on an hourly or<br />
salaried bas<strong>is</strong>;<br />
(iii) the activities of the call center personnel are strictly limited<br />
and superv<strong>is</strong>ed;<br />
(iv) the call center personnel do not handle customer funds and<br />
securities in connection with the activities d<strong>is</strong>cussed; and<br />
(v) the call center personnel do not d<strong>is</strong>cuss the potential value of<br />
the stock, make recommendations to the policyholders regarding<br />
the transaction, or solicit policyholders except to answer<br />
questions. 123<br />
[E] Bulletin Boards<br />
The SEC staff has considered the application of the broker-dealer<br />
reg<strong>is</strong>tration requirements to bulletin boards for an <strong>is</strong>suer’s stock,<br />
including bulletin boards set up by a company to facilitate trading in<br />
its own stock, and bulletin boards operated by an unaffiliated third<br />
party 124 for the securities of multiple companies. 125 In determining<br />
whether the operator of a bulletin board must reg<strong>is</strong>ter as a brokerdealer,<br />
the SEC has considered the same factors used in deciding<br />
whether a person <strong>is</strong> a broker d<strong>is</strong>cussed above. The SEC has given noaction<br />
relief to a company with “passive bulletin board systems” that<br />
provide information to prospective sellers and buyers of the company’s<br />
securities, provided that:<br />
(i) no transactions would be effected by the systems themselves;<br />
(ii) the companies would have no role in effecting transactions<br />
between participants; and<br />
123. Anthem Insurance Co., SEC No-Action Letter (Oct. 25, 2001); Principal<br />
Mutual Holding Co., SEC No-Action Letter (Oct. 9, 2001); Phoenix Home<br />
Life Mutual Insurance Co., SEC No-Action Letter (May 31, 2001); John<br />
Hancock Mutual Life Insurance Co., SEC No-Action Letter (Nov. 1, 1999).<br />
124. See, e.g., Portland Brewing Co., SEC No-Action Letter (Dec. 14, 1999);<br />
Flamemaster Corp., SEC No-Action Letter (Oct. 29, 1996); Real Goods<br />
Trading Corp., SEC No-Action Letter (June 24, 1996).<br />
125. See, e.g., Letter from Catherine McGuire, Chief Counsel, Div<strong>is</strong>ion of<br />
Market Regulation to Lori Livingston, Transfer Online, Inc. (May 13,<br />
2000); Investex Investment Exchange Inc., SEC No-Action Letter<br />
(Apr. 9, 1990); Petroleum Information Corp., SEC No-Action Letter<br />
(Nov. 28, 1989).<br />
(<strong>Broker</strong>-<strong>Dealer</strong> Reg., Rel. #9, 9/10)<br />
1A–31