Broker-Dealer Regulation: Rapid Fire

What this video covers

• Whether a firm is acting as a broker (agent, commission) or dealer (principal, markup or markdown) on a given trade, and why the label is capacity-based, not permanent
• Which entities are excluded from the broker-dealer definition under the Uniform Securities Act (USA), and why banks have a blanket state exclusion but only activity-specific federal exceptions
• How firm commitment underwriting shifts unsold-share risk to the underwriter, while best efforts leaves that risk with the issuer
• What makes a market maker different from an ordinary dealer: the two-sided market requirement, continuous basis, and spread-based profit
• The dual registration requirement for broker-dealers at the Securities and Exchange Commission (SEC), self-regulatory organization (SRO), and state level, plus the two fragile no-place-of-business exceptions and what breaks them
• The books-and-records creation rule versus the retention rule, and the specific look-back and retention periods: 10 years for disciplinary disclosure, 6 years for primary financial and transactional records, 3 years for communications and superseded procedures
• Why tiered branch inspections require annual reviews for offices of supervisory jurisdiction (OSJs) and non-supervisory branches every three years, and how strict liability applies to firms with inadequate supervisory procedures