Effective Dates: 08/19/2011 - Present Previous | Next

TN 10 (08-11)

RS 02101.195 Securities Salespeople

A. Definitions

1. Blue-sky laws

Blue-sky laws are state statutes that regulate and supervise securities offerings and sales to protect citizen investors from investing in fraudulent companies. Most blue-sky laws require registering new issues of securities with a state agency that reviews selling documents for accuracy and completeness. Blue-sky laws also regulate securities brokers and salespeople.

2. Securities dealers

Securities dealers engage in the buying and selling of new stocks and bonds, or the redistributing of seasoned ones. The dealer is licensed by the state to do business and is subject to the provisions of the State Securities Acts and blue-sky laws. The rules of the Securities Exchange Commission regulate the dealer, and various dealers’ organizations, where the dealer is a member.

3. Securities salespeople

Securities dealers may hire securities salespeople to develop their business. Salespeople are usually licensed to a particular dealer. Generally, the dealer furnishes the salespeople with desk space, telephones, market quotations, bookkeeping services, and clerical assistance. However, the salespeople may be required to provide their own rental space and clerical help with funds provided by the dealer.

B. Regulations require that dealers exercise control over salespeople

The securities industry is heavily regulated and the broker is required to exercise a great deal of control over the salesperson. The SSA has long accepted that such regulation assures legal and ethical conduct by salespeople to protect the public against fraudulent dealings. Such regulation by itself does not give a broker the degree of control that is necessary to make the salesperson an employee; however, it is a factor to consider, along with other evidence, in each case. (See SSR 72-58 , C.B. 1971-1975, p.200)

C. Securities salespeople as employees

Securities salespeople are employees when the broker or dealer:

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    has the right to interrupt or set the order of services;

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    provides instruction or training in how the salesperson approaches prospects, closes sales, and works on particular problems;

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    requires attendance at the broker’s or dealer’s office at specific times;

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    requires fixed hours of work;

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    requires that nearly all work be done on the broker's or dealer's premises;

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    requires the salesperson to report on activities; and

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    pays the salesperson a salary or guaranteed minimum wage.

D. Securities salespeople as independent contractors

A securities salesperson is an independent contractor when:

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    sales meetings are held regularly, but attendance is voluntary;

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    the dealer furnishes the salesperson with desk space, computer facilities, market quotations, statistical and bookkeeping services, and clerical assistance;

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    the salesperson agrees to work diligently for the dealer and to abide by all laws, rules, and regulations under which the dealer operates the business;

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    the salesperson concludes sales in the name of the dealer and pays the money to the dealer;

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    the salesperson is licensed to a particular dealer;

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    the salesperson does not have to work fixed hours;

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    the salesperson is paid on a commission basis at periodic intervals;

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    the salesperson's income is primarily dependent on their own initiative and effort;

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    the securities dealer engages the salesperson in the advancement of the business; and

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    under certain circumstances, the salesperson may bear a part of the losses resulting from a transaction.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0302101195
RS 02101.195 - Securities Salespeople - 08/19/2011
Batch run: 07/03/2014
Rev:08/19/2011