BROKER

broker,n.1. An agent who acts as an intermediary or negotiator, esp. between prospective buyers and sellers; a person employed to make bargains and contracts between other persons in matters of trade, commerce, or navigation. • A broker differs from a factor because the broker usu. does not have possession of the property. Cf. FACTOR. [Cases: Brokers  2.C.J.S. Brokers §§ 2–5.] 2.Securities. A person engaged in the business of conducting securities transactions for the accounts of others. [Cases: Securities Regulation  11.20, 40.12, 60.32. C.J.S. Securities Regulation §§ 72, 157–158, 164–165, 195, 217.] — broker,vb.

“The most important determining factor of what constitutes a ‘broker’ is whether the party is dealing for itself or for another. A broker may, by contract, have title to property pass through it (though usually it does not), and it may, by contract, collect from the consumer, but a broker does not deal on its account. Two preliminary requirements must be met for a finding that an individual is acting as a broker: (1) the person is acting for compensation; and (2) the person is acting on behalf of someone else.” 12 Am. Jur. 2d Brokers § 1 (1997).

broker-agent. 1. A person who acts as an intermediary between parties to a transaction, and as a representative of one of them. [Cases: Brokers  2, 6. C.J.S. Brokers §§ 2–5, 25–26, 31–32.] 2. A person licensed both as a broker and as an agent. [Cases: Brokers  3. C.J.S. Brokers §§ 14–24.]

broker-dealer. A brokerage firm that engages in the business of trading securities for its own account (i.e., as a principal) before selling them to customers. • Such a firm is usu. registered with the SEC and with the state in which it does business. See DEALER(2). [Cases: Securities Regulation  11.20, 40.12, 60.32. C.J.S. Securities Regulation §§ 72, 157–158, 164–165, 195,

217.]

“Since many broker-dealers maintain custody of funds and securities belonging to their customers, safeguards are required to assure that the customers can recover those funds and securities in the event the broker-dealer becomes insolvent. The three principal techniques that have been utilized are (a) financial responsibility standards for broker-dealers, (b) requirements for segregation of customers’ funds and securities, and (c) maintenance of an industry-wide fund to satisfy the claims of customers whose brokerage firms become insolvent.” David L. Ratner, Securities Regulation in a Nutshell 182–83 (4th ed. 1992).

broker for sale.A broker retained to sell something, but having neither possession of the goods nor any right of action in the broker’s own name on contracts that the broker enters into.

[Cases: Brokers  2, 6. C.J.S. Brokers §§ 2–5, 25–26, 31–32.]

broker’s broker.A municipal securities broker or dealer who routinely effects transactions for

the account of other brokers, dealers, and municipal securities dealers.

 

commercial broker.A broker who negotiates the sale of goods without having possession or control of the goods. Cf. FACTOR(2). [Cases: Brokers  2, 6. C.J.S. Brokers §§ 2–5, 25–26,

31–32.]

commission broker.A member of a stock or commodity exchange who executes buy and sell

orders.

customhouse broker.A broker who prepares paperwork for the entry or clearance of ships,

and for the import or export of goods. — Also termed customs broker. [Cases: Customs Duties

60.5. C.J.S. Customs Duties §§ 56, 66–70.]

discount broker. 1. A broker who discounts bills of exchange and promissory notes, and advances money on securities. 2. A broker who executes buy and sell orders at commission rates lower than those of full-service brokers. [Cases: Brokers  69. C.J.S. Brokers §§ 177–180.]

government-securities interdealer broker.A broker engaged exclusively in the business of transacting in government securities for parties who are themselves government brokers or dealers.

institutional broker.A broker who trades securities for institutional clients such as banks,

mutual funds, pension funds, and insurance companies.

insurance broker.Insurance. A person who, for compensation, brings about or negotiates contracts of insurance as an agent for someone else, but not as an officer, salaried employee, or licensed agent of an insurance company. • The broker acts as an intermediary between the insured and the insurer. — Also termed producer. [Cases: Insurance  1609. C.J.S. Insurance §§ 179, 181.]

“The term ‘insurance broker’ is often used to characterize an individual who is thought to act primarily on behalf of a purchaser in an insurance transaction. This delineation … is employed by some courts and writers even though almost all insurance brokers are actually compensated for their services through commissions that are paid by the insurers. Because brokers receive compensation from the insurer, it seems evident that a persuasive argument can be made for not treating a broker as an agent of the insurance purchaser.” Robert E. Keeton & Alan I. Widiss, Insurance Law: A Guide to Fundamental Principles, Legal Doctrines, and Commercial Practices § 2.5, at 83–84 (1988).

loan broker.A person who is in the business of lending money, usu. to an individual, and

taking as security an assignment of wages or a security interest in the debtor’s personal property.

merchandise broker.One who negotiates the sale of merchandise without possessing it. • A

merchandise broker is an agent with very limited powers.

money broker.A broker who negotiates the lending or raising of money for others.

mortgage broker.An individual or organization that markets mortgage loans and brings lenders and borrowers together. • A mortgage broker does not originate or service mortgage loans.

[Cases: Brokers  2. C.J.S. Brokers §§ 2–5.] note broker.A broker who negotiates the discount or sale of commercial paper.

 

real-estate broker.A broker who negotiates contracts of sale and other agreements (such as mortgages or leases) between buyers and sellers of real property. • Real-estate brokers must be licensed in the states where they conduct business. [Cases: Brokers  2, 3. C.J.S. Brokers §§ 2–5,

14–24.]

registered broker.A broker registered or required to be registered under the Securities Exchange Act of 1934. [Cases: Securities Regulation  40.12. C.J.S. Securities Regulation §§

157–158, 165.]

responsible broker-dealer.A broker-dealer who communicates bids or offers on the floor of a stock exchange at the designated location for trading in a reported security or who, in an off-exchange transaction, communicates the bid or offer as either a principal or an agent, for its own or another’s account. SEC Rule 11Ac1-1(a)(21) (17 CFR § 240.11Ac1-1(a)(21)).

securities broker.A broker employed to buy or sell securities for a customer, as opposed to a securities dealer, who trades as a principal before selling the securities to a customer. See DEALER(2). [Blacks Law 8th]