Payments to Unregistered Persons

What this video covers

• The default presumption that any person receiving transaction-based compensation is required to register as a broker-dealer, and why the burden to rebut that presumption falls entirely on the member firm
• The three documented authorities a firm must rely on before paying an unregistered person: Securities and Exchange Commission (SEC) releases or interpretations, SEC staff no-action letters, or formal legal opinions from counsel
• Why compensation includes indirect and non-cash transfers, and why routing payments through a third party, paying a family member, or substituting property for cash still violates the prohibition
• The three strict preconditions for the continuing-commission exception: a bona fide written contract signed while the rep is still registered, zero solicitation or servicing after retirement, and compliance with federal securities laws
• Why a post-retirement handshake or side letter fails, and why the exception instantly evaporates the moment a retiree calls a client for an account review or recommendation
• The seven conditions for the foreign-finder exception, and why missing any single condition destroys the entire exemption
• Why foreign customer status for individuals is determined solely by citizenship, not residency, and why even minor assistance like translating a document disqualifies the foreign finder