17 CFR 240.15g-4 - Disclosure of compensation to brokers or dealers.

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§ 240.15g-4 Disclosure of compensation to brokers or dealers.
Preliminary Note:
Brokers and dealers may wish to refer to Securities Exchange Act Release No. 30608 (April 20, 1992) for a discussion of the procedures for computing compensation in active and competitive markets, inactive and competitive markets, and dominated and controlled markets.
(a) Disclosure requirement. It shall be unlawful for any broker or dealer to effect a transaction in any penny stock for or with the account of a customer unless such broker or dealer discloses to such customer, within the time periods and in the manner required by paragraph (b) of this section, the aggregate amount of any compensation received by such broker or dealer in connection with such transaction.
(b) Timing.
(1) The information described in paragraph (a) of this section:
(i) Shall be provided to the customer orally or in writing prior to effecting any transaction with or for the customer for the purchase or sale of such penny stock; and
(ii) Shall be given or sent to the customer in writing, at or prior to the time that any written confirmation of the transaction is given or sent to the customer pursuant to 17 CFR 240.10b-10.
(2) A broker or dealer, at the time of making the disclosure pursuant to paragraph (b)(1)(i) of this section, shall make and preserve as part of its records, a record of such disclosure for the period specified in 17 CFR 240.17a-4(b).
(c) Definition of compensation. For purposes of this section, compensation means, with respect to a transaction in a penny stock:
(1) If a broker is acting as agent for a customer, the amount of any remuneration received or to be received by it from such customer in connection with such transaction;
(2) If, after having received a buy order from a customer, a dealer other than a market maker purchased the penny stock as principal from another person to offset a contemporaneous sale to such customer or, after having received a sell order from a customer, sold the penny stock as principal to another person to offset a contemporaneous purchase from such customer, the difference between the price to the customer and such contemporaneous purchase or sale price; or
(3) If the dealer otherwise is acting as principal for its own account, the difference between the price to the customer and the prevailing market price.
(d) Active and competitive market. For purposes of this section only, a market may be deemed to be “active and competitive” in determining the prevailing market price with respect to a transaction by a market maker in a penny stock if the aggregate number of transactions effected by such market maker in the penny stock in the five business days preceding such transaction is less than twenty percent of the aggregate number of all transactions in the penny stock reported on a Qualifying Electronic Quotation System (as defined in 17 CFR 240.15g-3(c)(5)) during such five-day period. No presumption shall arise that a market is not “active and competitive” solely by reason of a market maker not meeting the conditions specified in this paragraph.
[57 FR 18034, Apr. 28, 1992]

Title 17 published on 2014-04-01

The following are only the Rules published in the Federal Register after the published date of Title 17.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-09-15; vol. 79 # 178 - Monday, September 15, 2014
    1. 79 FR 55078 - Nationally Recognized Statistical Rating Organizations
      GPO FDSys XML | Text
      SECURITIES AND EXCHANGE COMMISSION
      Final rules.
      This rule is effective November 14, 2014; except the amendments to § 240.17g-3(a)(7) and (b)(2) and Form NRSRO, which are effective on January 1, 2015; and the amendments to § 240.17g-2(a)(9), (b)(13) through (15), § 240.17g-5(a)(3)(iii)(E), (c)(6) through (8), § 240.17g-7(a) and (b), and Form ABS-15G, which are effective June 15, 2015. The addition of §§ 240.15Ga-2, 240.17g-8, 240.17g-9, 240.17g-10, and Form ABS Due Diligence-15E are effective June 15, 2015.
      17 CFR Parts 232, 240, 249, and 249b

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 7 - AGRICULTURE
U.S. Code: Title 12 - BANKS AND BANKING
U.S. Code: Title 15 - COMMERCE AND TRADE

§ 27dd

§ 77c - Classes of securities under this subchapter

§ 77d - Exempted transactions

§ 77g - Information required in registration statement

§ 77j - Information required in prospectus

§ 77s - Special powers of Commission

15 U.S. Code § 32, 33 - Repealed.

15 U.S. Code § 32, 33 - Repealed.

§ 77eee - Securities required to be registered under Securities Act

§ 77ggg - Qualification of indentures covering securities not required to be registered

§ 77nnn - Reports by obligor; evidence of compliance with indenture provisions

§ 77sss - Rules, regulations, and orders

§ 77ttt - Hearings by Commission

§ 78c - Definitions and application

15 U.S. Code § 32, 33 - Repealed.

15 U.S. Code § 32, 33 - Repealed.

§ 78d - Securities and Exchange Commission

§ 78e - Transactions on unregistered exchanges

§ 78f - National securities exchanges

§ 78g - Margin requirements

§ 78i - Manipulation of security prices

§ 78j - Manipulative and deceptive devices

15 U.S. Code § 32, 33 - Repealed.

§ 78k - Trading by members of exchanges, brokers, and dealers

15 U.S. Code § 32, 33 - Repealed.

15 U.S. Code § -

§ 78m - Periodical and other reports

§ 78n - Proxies

15 U.S. Code § -

15 U.S. Code § 32, 33 - Repealed.

15 U.S. Code § 32, 33 - Repealed.

§ 78p - Directors, officers, and principal stockholders

§ 78q - Records and reports

15 U.S. Code § 32, 33 - Repealed.

§ 78s - Registration, responsibilities, and oversight of self-regulatory organizations

15 U.S. Code § 32, 33 - Repealed.

§ 78w - Rules, regulations, and orders; annual reports

§ 78x - Public availability of information

15 U.S. Code § -

§ 78mm - General exemptive authority

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

15 U.S. Code § 79 to 79z–6 - Repealed.

§ 7201 - Definitions

§ 7202 - Commission rules and enforcement

§ 8302 - Review of regulatory authority

U.S. Code: Title 18 - CRIMES AND CRIMINAL PROCEDURE
Statutes at Large

Title 17 published on 2014-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR 240 after this date.

  • 2014-09-15; vol. 79 # 178 - Monday, September 15, 2014
    1. 79 FR 55078 - Nationally Recognized Statistical Rating Organizations
      GPO FDSys XML | Text
      SECURITIES AND EXCHANGE COMMISSION
      Final rules.
      This rule is effective November 14, 2014; except the amendments to § 240.17g-3(a)(7) and (b)(2) and Form NRSRO, which are effective on January 1, 2015; and the amendments to § 240.17g-2(a)(9), (b)(13) through (15), § 240.17g-5(a)(3)(iii)(E), (c)(6) through (8), § 240.17g-7(a) and (b), and Form ABS-15G, which are effective June 15, 2015. The addition of §§ 240.15Ga-2, 240.17g-8, 240.17g-9, 240.17g-10, and Form ABS Due Diligence-15E are effective June 15, 2015.
      17 CFR Parts 232, 240, 249, and 249b