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

What Is a Broker-Dealer? § 1A:7.2
banks or U.S. branches of foreign banks that proposed to execute
transactions through, or on behalf of, a U.S. broker-dealer affiliate. 362
The Rule 15a-6 Adopting Release states that the SEC’s interpretative
advice issued prior to the adoption of Rule 15a-6 remains valid
unless specifically withdrawn. 363 Accordingly, these no-action letters
continue to provide guidance on the registration requirements on
foreign broker-dealers.
[A][2] Jurisdictional Language in Section 15 and
Section 30
Section 30(b) of the Exchange Act on its face exempts from the
Exchange Act, and therefore from the broker-dealer registration requirements
under section 15, “any person insofar as he transacts
business in securities without the jurisdiction of the United States,
unless he transacts such business in contravention of such rules and
regulations as the SEC may prescribe as necessary or appropriate to
prevent evasion of this title.” 364 Before the adoption of Rule 15a-6, the
SEC had not recognized any exemptions under this provision. 365 By
contrast, courts held that the section 30(b) exemption is unavailable
under three circumstances: 366
(i) if transactions occurred in a U.S. securities market; 367
(ii) if offers and sales were made abroad to U.S. persons or in the
United States to facilitate sales of securities abroad; 368 or
(iii) if the United States was used as a base for securities fraud
perpetrated on foreigners. 369
The SEC stated its position on the application of section 30(b) in its
Rule 15a-6 Adopting Release. The release provided that the phrase
362. See The Bank of Montreal, SEC No-Action Letter (June 20, 1989);
National Westminster Bank PLC, SEC No-Action Letter (July 7, 1988);
Chase Manhattan Corp., SEC No-Action Letter (July 28, 1987).
363. See Rule 15a-6 Adopting Release, supra note 28 at 32.
364. Exchange Act § 30(b).
365. See Kook v. Crang, 182 F. Supp. 388 (S.D.N.Y. 1960).
366. See Rule 15a-6 Adopting Release, supra note 28.
367. Roth v. Fund of Funds, Ltd., 405 F.2d 421 (2d Cir. 1968), cert. denied, 394
U.S. 975, reh’g denied, 395 U.S. 941 (1969); Selzer v. The Bank of
Bermuda, Ltd., 385 F. Supp. 415 (S.D.N.Y. 1974).
368. SEC v. United Fin. Group, Inc., 474 F.2d 354 (9th Cir. 1973); Leasco Data
Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1336 n.6 (2d Cir.
1972).
369. Arthur Lipper Corp. v. SEC, 547 F.2d 171 (2d Cir. 1976), reh’g denied, 551
F.2d 915 (2d Cir. 1977), cert. denied, 434 U.S. 1009 (1978).
(Broker-Dealer Reg., Rel. #9, 9/10)
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