In some of the state laws, the issuers of securities can also, depending on the role that they play in the transactions, be broker dealers and have to actually register as broker dealers. The registration process is relatively simple, said Scott. As far as the forms that you have to file, it's sort of a coordinated system. You file the form and post a surety bond to protect investors from you running off with their money. There are also certain minimum capital requirements for maintaining essentially net worth reserves.
Registration is effective for a year and can be renewed.
In addition there are all sorts of rules and regulations restricting the manner in which broker-dealers can operate and how they handle securities and effect transactions. Frequently a broker dealer is a corporation, said Scott. Since corporations act through their agents, there's an agent registration scheme. Under the state Blue Sky laws there's generally an exemption that excludes agents representing an issuer in an exempt transaction or security, or a transaction with existing employees, directors and officers if there's no commission paid. The third category involved in securities transactions is an investment advisor.