# 15 U.S.C. § 78c(a)(4) — Definition of "broker"

- **Source URL:** https://www.law.cornell.edu/uscode/text/15/78c
- **Host:** Cornell Legal Information Institute (LII) — U.S. Code text
- **Primary cite:** Securities Exchange Act of 1934 § 3(a)(4); codified at 15 U.S.C. § 78c(a)(4)
- **Pinpoint:** § 78c(a)(4)(A) (general definition); (a)(4)(B) (bank-activity exceptions); (a)(4)(C)–(D)
- **Retrieved-date:** UNKNOWN
- **Status:** primary-archived

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## Why this matters for the creator platform

The threshold question for paying a creator is whether the creator (or the platform)
becomes an unregistered "broker" under Exchange Act § 15(a) by receiving compensation
tied to securities transactions. The statutory hook is the § 3(a)(4)(A) definition
below: a person is a broker if they are **"engaged in the business of effecting
transactions in securities for the account of others."** SEC enforcement (e.g.,
*In re Ranieri Partners LLC*, 2013) reads transaction-based compensation as strong
evidence of being "engaged in the business" of effecting transactions. The
issuer/associated-person safe harbor that avoids this result is Rule 3a4-1
(`17 CFR 240.3a4-1`), which is a separate source and should be pulled alongside this.

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## Key sections flagged

**§ 78c(a)(4)(A) — In general (the core "broker" test):**

> "(4) Broker.— (A) In general.— The term 'broker' means any person engaged in the
> business of effecting transactions in securities for the account of others."

This is the operative definition. The two load-bearing phrases for creator
compensation are **"engaged in the business of"** (recurring/regular participation,
not a one-off) and **"effecting transactions in securities for the account of
others"** (participating in the transaction, not merely publishing content). Paying
a creator per-transaction or on a percentage of amounts raised pushes toward "broker"
status; flat, non-transaction-based content fees do not, by themselves, satisfy this
definition.

**§ 78c(a)(4)(B) — Exception for certain bank activities:**

> "(B) Exception for certain bank activities.— A bank shall not be considered to be a
> broker because the bank engages in any one or more of the following activities under
> the conditions described:"

Enumerated bank carve-outs follow at (B)(i)–(xi): (i) third party brokerage
arrangements; (ii) trust activities; (iii) permissible securities transactions;
(iv) certain stock purchase plans; (v) sweep accounts; (vi) affiliate transactions;
(vii) private securities offerings; (viii) safekeeping and custody activities;
(ix) identified banking products; (x) municipal securities; (xi) a de minimis
exception (not more than 500 transactions in any calendar year). These are
bank-specific and do **not** apply to a non-bank creator platform, but they are the
statutory structure of the exceptions and are noted here for completeness.

**§ 78c(a)(4)(C) — Execution by broker or dealer:**

> "(C) Execution by broker or dealer.—"

The exceptions in (B)(ii), (iv), and (viii) are limited where activities would result
in trades of publicly traded securities in the United States unless the bank directs
the trade to, or executes through, a registered broker or dealer (or follows
SEC-prescribed procedures). Not applicable to a non-bank platform.

**§ 78c(a)(4)(D) — Fiduciary capacity:**

> "(D) Fiduciary capacity.—"

Defines "fiduciary capacity" for the (B)(ii) trust exception (trustee, executor,
administrator, registrar of stocks and bonds, transfer agent, guardian, assignee,
receiver, custodian, investment adviser with discretion, and similar capacities).
Bank-specific; noted for completeness.

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*Note on retrieval:* the (a)(4)(A) general-definition text above was extracted
verbatim from the Cornell LII HTML for 15 U.S.C. § 78c. The (a)(4)(B)–(D) headings
and the enumerated (B)(i)–(xi) list are reproduced from the same page; the full text
of each bank sub-exception is on the source page but is not load-bearing for the
creator-compensation question and is summarized rather than quoted in full.