Brokers

Brokers in the United States

Brokers are people in the business of selling stock to investors. They are generally different from “Dealers,” who buy and sell stock for themselves, though “Broker-Dealers” do both.

Brokers Definition

Those who are engaged for others in the negotiation of contracts relative to property, with the custody of which they have no concern. One who receives a commission for making a bargain for another. A salaried agent is not a broker. A broker differs from a factor in that he has no possession of the property he sells. A person employed by merchants English and merchants strangers in contriving, making and concluding bargains and contracts -according to the Cyclopedia– between them concerning their wares and merchandise, and the moneys to be taken up by exchange between such merchants and tradesmen.

  • Bill and Note Brokers. Those who negotiate the purchase and sale of bills of exchange and promissory notes.
  • Exchange Brokers. Those who negotiate bills of exchange drawn on foreign countries, or on other places in this country.
  • Insurance Brokers. Those who procure insurance, and negotiate between insurers and insured.
  • Merchandise Brokers. Those who negotiate the sale of merchandise without having possession or control of it, as factors have.
  • Pawnbrokers. Those who lend money in small sums, on the security of personal property, at usurious rates of interest. They are licensed by the authorities, and excepted from the operation of the usury laws.
  • Real-Estate Brokers. Those who negotiate the sale or purchase of real property. They are a numerous class, and, in addition to the above duty, sometimes procure loans on mortgage security, collect rents, and attend to the letting and leasing of houses and lands.
  • Ship Brokers. Those who negotiate the purchase and sale of ships, and the business of freighting vessels. Like other brokers, they receive a commission from the seller, only.
  • Stock Brokers. Those employed to buy and sell shares of stock in incorporated companies, and the indebtedness of governments. These brokers have possession of the certificates and other written evidences of title.

Legal Materials

To do background research on a broker:

  • Search the FINRA BrokerCheck database [Caveat: The data may go back only to 2007] and/or call the BrokerCheck Hotline (800-289-9999);(b) Search a good news database for articles (for database suggestions, see the “News – Newspapers & Magazines – Articles” entry in this legal Encyclopedia);
  • Get the broker’s Form BD, “Uniform Application for Broker-Dealer Registration,” by sending a request to the SEC at publicinfo@sec.gov. [Note: You can buy Form BDs filed with the SEC from 1979 through 2000 faster by calling ThomsonReuters Custom Research Services (formerly Disclosure) at 301-545-4930 (direct to D.C.) or 800-638-8241 (the toll-free main number)];
  • Search for arbitration awards using the databases discussed in the Awardssection of the Arbitration, Mediation and Alternative Dispute Resolution entries in this American legal Encyclopedia.
  • Search the internet with a good search engine to see if anything comes up.
  • Search the National Futures Association’s BASIC database.
  • Search a database of SEC filings to see if anything comes up (see the Filings section of the “Securities and Exchange Commission” in this Encyclopedia).
  • Call the appropriate state agency (in New York it’s the Investor Protection Bureau, 212-416-8222).

Futures Brokers: Futures brokers are regulated by the National Futures Association, rather than the SEC. You can check for disciplinary actions through the National Futures Association’s Background Affiliation Status Information Center. For more information, check out the NFA Web site.

Investment Advisers: If the broker is also an investment adviser, or works for an investment advisery firm, see also the entry for “Investment Advisers.”

Brokerage Firms

FINRA posts the disciplinary history of brokerage firms.

To research a brokerage firm, use the same information sources discussed in this “Brokers” entry above.

Brokers in Foreign Legal Encyclopedias

For starting research in the law of a foreign country:

Link Description
Brokers Brokers in the World Legal Encyclopedia.
Brokers Brokers in the European Legal Encyclopedia.
Brokers Brokers in the Asian Legal Encyclopedia.
Brokers Brokers in the UK Legal Encyclopedia.
Brokers Brokers in the Australian Legal Encyclopedia.

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Resources

Further Reading

See Also

Certified Financial Planners (CFPs)
Financial Industry Regulatory Authority (FINRA)
Investment Advisers
Securities Dealers
Securities Laws
Securities and Exchange Commission
Stock Prices
Arbitration
Mediation
Company Information
Alternative Dispute Resolution

Brokers: Open and Free Legal Research of US Law

Federal Primary Materials

The U.S. federal government system consists of executive, legislative, and judicial branches, each of which creates information that can be the subject of legal research about Brokers. This part provides references, in relation to Brokers, to the legislative process, the federal judiciary, and the primary sources of federal law (cases, statutes, and regulations).

Federal primary materials about Brokers by content types:

Laws and Regulations

US Constitution
Federal Statutory Codes and Legislation

Federal Case Law and Court Materials

U.S. Courts of Appeals
United States courts of appeals, inclouding bankruptcy courts and bankcruptcy appellate panels:

Federal Administrative Materials and Resources

Presidential Materials

Materials that emanate from the President’s lawmaking function include executive orders for officers in departments and agencies and proclamations for announcing ceremonial or commemorative policies. Presidential materials available include:

Executive Materials

Federal Legislative History Materials

Legislative history traces the legislative process of a particular bill (about Brokers and other subjects) for the main purpose of determining the legislators’ intent behind the enactment of a law to explain or clarify ambiguities in the language or the perceived meaning of that law (about Brokers or other topics), or locating the current status of a bill and monitoring its progress.

State Administrative Materials and Resources

State regulations are rules and procedures promulgated by state agencies (which may apply to Brokers and other topics); they are a binding source of law. In addition to promulgating regulations, state administrative boards and agencies often have judicial or quasi-judicial authority and may issue administrative decisions affecting Brokers. Finding these decisions can be challenging. In many cases, researchers about Brokers should check state agency web sites for their regulations, decisions, forms, and other information of interest.

State rules and regulations are found in codes of regulations and administrative codes (official compilation of all rules and regulations, organized by subject matter). Search here:

State opinions of the Attorney General (official written advisory opinions on issues of state law related to Brokers when formerly requested by a designated government officer):

Tools and Forms

Law in Other Regions

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