NASAA Series 63Regulation of Broker-Dealers and AgentsMedium
A financial planner, registered as an investment adviser in State A, occasionally sells securities from her personal portfolio to clients. She does not receive commissions for these transactions, nor does she hold herself out as a broker-dealer. Under the Uniform Securities Act, how would this individual likely be classified?
- AAs a broker-dealer, because she is effecting transactions in securities.
- BAs an investment adviser representative, given her primary registration.
- CAs an issuer, since she is selling securities from her own holdings.
- DAs an agent, due to selling securities to clients.
Show answer & explanationAnswer & explanation
Correct answer: D. As an agent, due to selling securities to clients.
Even though she doesn't receive commissions, an individual who effects transactions in securities for others (even from her own portfolio to clients) is generally considered an agent under the Uniform Securities Act, unless specifically excluded. The key is 'effecting transactions.'
Why the other options are wrong
- A. She is not holding herself out as a broker-dealer and is not engaged in the business of effecting transactions for others, but rather as an individual.
- B. While she is an investment adviser representative, her selling of securities to clients triggers the agent definition.
- C. An issuer is typically the entity that originates the securities, not an individual selling personal holdings.
Agent Definition (Individual)
An agent is any individual who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
- Includes individuals selling securities from their personal portfolio to clients.
- Compensation is not a determining factor for agent status.
- Registration is generally required unless specifically excluded.
Memory trick: Agent's Action Creates Connection