Broker Dealer Regulation

# Broker-Dealer Regulation Why this matters on the exam: Broker-dealer regulation appears directly in Section IV (Laws, Regulations & Guidelines), which carries 30% of the Series 65 exam weight (approximately 39 of 130 scored questions) [NASAA Series 65 Exam Content Outline, effective 2023-06-12] — making it one of the highest-priority topics you'll face. Expect questions that test your ability to distinguish broker-dealers from investment advisers, understand Regulation Best Interest, and recognize the compliance structure surrounding BDs and their agents. --- ## What Is a Broker-Dealer? A broker-dealer (BD) is a firm that is in the business of buying and selling securities on behalf of customers (acting as a broker, or agent) or for its own account (acting as a dealer, or principal). The key word is *business* — the BD must be engaged in this activity as a regular commercial endeavor, not just occasionally. Every BD employs agents (also called registered representatives) who are the individuals who actually transact business with clients on the firm's behalf. Agents must be registered with the appropriate state(s) in which they conduct business. ### BD vs. Agent: The Structural Relationship | Entity | Who They Are | Registration | |--------|-------------|--------------| | Broker-Dealer | The firm/company | Registered at the federal and/or state level | | Agent | The individual employee of the BD | Registered in each state where they do business | An agent cannot conduct business independently — they must be associated with a registered BD. If an agent's registration with a BD is terminated,…