15 U.S.C. 78o, commonly called Exchange Act section 15, establishes important broker-dealer registration and conduct requirements. Whether someone is a broker depends on actual securities-related activity, not merely the title “consultant” or “finder.” Registration exemptions require specific conditions. [1]
Rules that determine the answer
Transaction-based compensation, solicitation, participation in negotiation, and handling customer funds can raise registration questions. Registration with the SEC, FINRA membership, state requirements, and individual licensing are related but distinct. The statute contains multiple specialized provisions and exceptions; a narrow exemption is not permission to ignore all securities law. [1] [2]
Consequences can include injunctions, disgorgement, penalties, rescission disputes, and, where the relevant criminal requirements are met, prosecution. The remedy and penalty depend on the actual provision and proceeding.
What to check before taking the next step
- Map the business model, products, customers, compensation, and proposed activities before accepting securities-related fees.
- Collect engagement contracts, compensation schedules, offering documents, customer communications, and registration records.
A distinction that changes the result
A securities offering exemption for the issuer is not automatically a broker-registration exemption for a person raising capital. Nor does conducting activity online avoid the registration question. A review should identify whether the person effects transactions, solicits investors, recommends securities, negotiates terms, handles funds, or receives compensation linked to successful investments. Each feature contributes to a functional analysis. Before proceeding under an exemption, document the actual provision relied on, its eligibility conditions, and any restrictions on the person’s compensation or participation. [2]
Practical example
A consultant receives a percentage of money investors contribute and actively solicits them. Calling the payment a marketing fee does not settle whether broker registration is required.
For related situations, see WKSI eligibility and offering rules and federal supremacy and preemption.
Primary sources
- 15 U.S.C. § 78o: Registration and regulation of brokers and dealers
- SEC: Guide to Broker-Dealer Registration
Sources checked: October 31, 2026.