15 CSR 30-51.175 - Exclusion From Definition of Broker-Dealer

PURPOSE: The commissioner is authorized by the Missouri Securities Act of 2003 to create exceptions from the definition of broker-dealer. This rule excludes from the definition certain credit unions engaged in limited broker-dealer activities under a networking arrangement with a registered broker-dealer.

(1) Networking Arrangements Between Broker-Dealers and Credit Unions. A credit union organized or chartered under the laws of the United States or under the laws of the state of Missouri, or that is organized or chartered under the laws of a state which has reciprocity with Missouri, is excluded from the definition of broker-dealer under section 409.1-102(4)(E), RSMo if such credit union's broker-dealer activities are limited to those authorized in a contractual or other written arrangement with a broker-dealer registered under the Missouri Securities Act of 2003 whereupon the broker-dealer offers brokerage services on or off the premises of the credit union and-

(A) Such broker-dealer is clearly identified as the person performing the brokerage services;

(B) The broker-dealer performs brokerage services in an area that is clearly marked and, to the extent practicable, physically separate from the routine deposit-taking activities of the credit union;

(C) Any materials used by the credit union to advertise or promote generally the availability of brokerage services under the arrangement clearly indicate that the brokerage services are being provided by the broker-dealer and not by the credit union;

(D) Any materials used by the credit union to advertise or promote generally the availability of brokerage services under the arrangement are in compliance with Missouri and federal securities laws before distribution;

(E) Employees of the credit union (other than agents of a broker-dealer who are registered under the Missouri Securities Act of 2003 and qualified pursuant to the rules of a self-regulatory organization) perform only clerical or ministerial functions in connection with brokerage transactions including scheduling appointments with the agents of a broker-dealer, except that employees of a credit union may forward customer funds or securities and may describe in general terms the types of investment vehicles available from the credit union and the broker-dealer under the arrangement;

(F) Employees of the credit union do not receive incentive compensation for any brokerage transaction unless such employees are agents of a broker-dealer, are registered under the Missouri Securities Act of 2003 and are qualified pursuant to the rules of a self-regulatory organization, except that the employees of the credit union may receive compensation for the referral of any customer if the compensation is a nominal one (1)-time cash fee of a fixed dollar amount and the payment of the fee is not contingent on whether the referral results in a transaction;

(G) Such services are provided by the broker-dealer on a basis in which all customers that receive any services are fully disclosed to the broker-dealer;

(H) The credit union does not carry a securities account of the customer; and

(I) The credit union or broker-dealer informs each customer that the brokerage services are provided by the broker-dealer and not by the credit union and that the securities are not deposits or other obligations of the credit union, are not guaranteed by the credit union, and are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.

Notes

15 CSR 30-51.175

AUTHORITY: sections 409.1-102(4) and 409.6-605, RSMo Supp. 2003.* Original rule filed Feb. 13, 2004, effective July 30, 2004.

AUTHORITY: sections 409.1-102(4) and 409.6-605, RSMo Supp. 2003.* Original rule filed Feb. 13, 2004, effective July 30, 2004.