Quick Answer
An agent is always a natural person who represents a broker-dealer or issuer in effecting or attempting to effect securities transactions; entities can never be agents. Most exclusions apply only to individuals representing issuers, not broker-dealers, and hinge on narrow, specific categories, such as exempt securities, exempt transactions, and no-commission employee dealings.
This section covers the defining elements of agent status, the natural-persons-only rule, the distinction between agents and investment adviser representatives (IARs), who is and is not an agent, exclusions from the agent definition, and the partner/officer/director rule.
What Are the Defining Elements of an Agent?
An agent is any individual (natural person), not the firm itself, who represents a broker-dealer (BD) or issuer in effecting or attempting to effect purchases or sales of securities. Three elements define agent status:
- Natural person only: agents are always individuals; no entity (corporation, LLC, partnership) can be an agent
- Represents a BD or issuer: acts on behalf of another party, not for their own account
- Effecting OR attempting to effect: registration is required even if no trade is ever completed; attempting to solicit a trade triggers the definition
Exam Tip: Gotchas
- The term "agent" under the Uniform Securities Act (USA) refers exclusively to individuals who represent broker-dealers or issuers in securities transactions. It does NOT refer to investment adviser representatives (IARs).
- An IAR who only provides advice is not an "agent" unless they also represent a BD in effecting transactions.
Can an Entity Be an Agent?
| Entity Type | Can Be Agent? | Why |
|---|---|---|
| Individual (human) | Yes | Natural person |
| Corporation | No | Legal entity, not natural person |
| Partnership | No | Legal entity |
| LLC | No | Legal entity |
When Does a Partner, Officer, or Director Become an Agent?
A partner, officer, or director of a BD or issuer is an agent only if they otherwise come within the definition, meaning they effect or attempt to effect securities transactions.
- A BD officer who handles only administrative duties is not an agent
- The same officer who begins personally soliciting clients or executing trades becomes an agent
Exam Tip: Gotchas
Becoming an agent and having to file for registration are two different things. Registration of a broker-dealer automatically constitutes registration of any agent who is a partner, officer, or director (or a person of similar status or performing similar functions). So when a BD's officer starts soliciting, they become an agent, but the firm's own registration already covers them and no separate agent filing is needed. The automatic-registration rule applies to the BD's partners, officers, and directors, not to rank-and-file representatives, who register individually.
Who Is an Agent?
- Registered representatives (stockbrokers) at a BD
- A person cold-calling prospects to solicit securities purchases
- An officer of an issuer who sells the issuer's own securities in a non-exempt (public) transaction
- An independent contractor effecting securities transactions on behalf of a BD
Who Is Excluded From the Agent Definition?
Certain individuals are NOT agents and do not require agent registration. These exclusions apply primarily to individuals representing issuers, not broker-dealers.
Issuer Representative Exclusions
| Exclusion | Details |
|---|---|
| Exempt securities transactions | Individual represents an issuer in transactions involving a specific, narrow list of exempt securities: government securities (U.S., state, and Canadian/foreign), bank, savings institution, and trust company securities, investment-grade commercial paper, and qualified employee benefit plan securities |
| Exempt transactions | Individual represents an issuer in transactions the USA treats as exempt (e.g., isolated non-issuer transactions, institutional investor transactions) |
| Federal covered securities (two categories only) | Individual represents an issuer in transactions involving one of exactly two categories of covered security under the Securities Act of 1933: sales to qualified purchasers, and Regulation A Tier 2 offerings. Exchange-listed securities are covered securities for other purposes, but they are not in these two categories and do not trigger this exclusion |
| Issuer employee transactions (no commission) | Individual represents an issuer in transactions with existing employees, partners, or directors of the issuer, provided no commission or other remuneration is paid or given directly or indirectly for soliciting any person in the state |
Broker-Dealer Representative Exclusion
- Individuals representing a broker-dealer are excluded from the agent definition only when their transactions in the state are limited to the narrow de minimis transactions described in the Securities Exchange Act of 1934 (SEA)
- In broad terms, that covers effecting a trade for an established customer of the firm (someone who has had an account for at least 30 days and was assigned to the associated person for at least 14 days), where the individual is already registered in the customer's home state and the employing BD is registered in the state where the trade is effected
- This exclusion is about the type of transaction, not the person's job title or duties
Exam Tip: Gotchas
- The "no commission" exclusion for issuer employees is very narrow. If any form of commission or remuneration is paid for soliciting, the individual must register as an agent. Even indirect compensation (e.g., bonuses tied to the number of employees who participate) can trigger registration.
- Exclusions from the agent definition apply primarily to individuals representing issuers, not broker-dealers. An individual who represents a BD and effects securities transactions must generally register as an agent regardless of the type of security involved.
- The exempt-securities exclusion is narrower than "any exempt security." It reaches only government securities, bank/savings institution/trust company securities, investment-grade commercial paper, and qualified employee benefit plan securities. Other securities that are exempt from registration, such as credit union shares, insurance company securities, building and loan association securities, and public utility securities, do NOT qualify for this exclusion. An issuer representative selling those securities in a non-exempt transaction must still register as an agent, even though the security itself never needed to register.
- The federal covered securities exclusion is narrow in the same way. It reaches only sales to qualified purchasers and Regulation A Tier 2 offerings. A share listed on the NYSE or Nasdaq is a federal covered security, but an issuer representative selling it is still an agent and must register. Both exclusions follow the same pattern the exam likes to test: the security's own exempt or covered status is one question, and whether the person selling it escapes agent registration is a separate, narrower one. The two do not move together.
What Should You Check on Exam Day?
- An agent is always a natural person; no entity can ever be an agent.
- "Effecting or attempting to effect" means registration is triggered even if no trade is ever completed.
- A BD partner, officer, or director only becomes an agent once they solicit or effect trades, and the BD's own registration automatically covers them with no separate filing; that automatic-registration rule does not extend to rank-and-file representatives.
- Exclusions from the agent definition apply primarily to individuals representing issuers, not broker-dealers.
- The exempt-securities exclusion covers only government, bank/savings institution/trust company, investment-grade commercial paper, and qualified employee benefit plan securities, not the full list of exempt securities.
- The federal covered securities exclusion reaches only two narrow categories; an issuer representative selling exchange-listed securities is still an agent and must register.
- The no-commission issuer-employee exclusion breaks with any commission or indirect remuneration paid for soliciting.