H.R. 7187 amends federal securities law to clarify when certain business entities owned by registered financial representatives do not qualify as "brokers" under federal regulation. Specifically, the bill exempts personal services entities—typically created by individual investment professionals to receive compensation and handle administrative matters—from being classified as brokers, as long as they meet specific conditions including having a written agreement with the broker-employer, maintaining proper records, and limiting ownership to the representative or their immediate family members. The bill primarily affects registered representatives working at brokerage firms and the personal business entities they may establish to manage their compensation and benefits. The exemption takes effect 180 days after the law is enacted, giving firms time to establish compliant arrangements. The Securities and Exchange Commission retains authority to establish additional requirements through rulemaking to ensure ongoing compliance with this exemption.
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