Defined terms relating to the networking exception from the definition of “broker.”

CFR · 2024-01-01 · US · Title 12

When used with respect to the Third Party Brokerage Arrangements (“Networking”) Exception from the definition of the term “broker” in section 3(a)(4)(B)(i) of the Act (15 U.S.C. 78c(a)(4)(B)(i)) in the context of transactions with a customer, the following terms shall have the meaning provided: (a) (1) Contacts or keeps an appointment with a broker or dealer as a result of the referral; or (2) Meets any objective, base-line qualification criteria established by the bank or broker or dealer for customer referrals, including such criteria as minimum assets, net worth, income, or marginal federal or state income tax rate, or any requirement for citizenship or residency that the broker or dealer, or the bank, may have established generally for referrals for securities brokerage accounts. (b)(1) (i) Paid on a discretionary basis; and (ii) Based on multiple factors or variables and: (A) Those factors or variables include multiple significant factors or variables that are not related to securities transactions at the broker or dealer; (B) A referral made by the employee is not a factor or variable in determining the employee's compensation under the plan; and (C) The employee's compensation under the plan is not determined by reference to referrals made by any other person. (2) Nothing in this paragraph (b) shall be construed to prevent a bank from compensating an officer, director or employee under a bonus or similar plan on the basis of any measure of the overall profitability or

official document · source cfr-2024 · id 12:§ 218.700