SEC. 2. BROKER DEFINITION EXCEPTION FOR REGISTERED 
REPRESENTATIVE-OWNED PERSONAL SERV-
ICES ENTITY. 
(a) IN GENERAL.—Section 3(a)(4) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(4)) is amended 
by adding at the end the following: 
‘‘(G) EXCEPTION FOR REGISTERED REP-
RESENTATIVE-OWNED PERSONAL SERVICES EN-
TITY.— 
‘‘(i) IN GENERAL.—A personal serv-
ices entity shall not be considered a broker 
solely by reason of receiving compensation 
on behalf of a registered representative 
from that representative’s broker at the di-
rection of such representative, if— 
‘‘(I) the broker instructs or oth-
erwise approves the amount and tim-
ing of the payment and maintains 
records regarding the payment made; 
‘‘(II) the personal services entity 
does not hold itself out as a broker; 
‘‘(III) the personal services entity 
does not engage in broker or dealer 
activity, other than the receipt of com-
pensation on behalf of the registered 
representative; 
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‘‘(IV) the broker maintains ade-
quate supervision and control over the 
registered representative; 
‘‘(V) the broker and the personal 
services entity have a written agree-
ment governing their relationship and 
the responsibilities of each party re-
garding compensation arrangements; 
‘‘(VI) the personal services entity 
is only owned by— 
‘‘(aa) the registered rep-
resentative; 
‘‘(bb) if the registered rep-
resentative is an individual, im-
mediate family members of the 
registered representative; or 
‘‘(cc) entities wholly owned 
by— 
‘‘(AA) 
the 
registered 
representative; or 
‘‘(BB) if the registered 
representative is an indi-
vidual, 
immediate 
family 
members of the registered 
representative; and 
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‘‘(VII) the personal services enti-
ty meets such other requirements as 
the Commission may prescribe, by 
rule. 
‘‘(ii) 
OVERSIGHT
AND
EXAMINA-
TION.—In order to ensure that a personal 
services entity that is not considered a 
broker by reason of this subparagraph con-
tinues to meet the requirements to not be 
considered a broker by reason of this sub-
paragraph, the personal services entity 
shall maintain, and make available upon 
request to the Commission and the applica-
ble self-regulatory organization, all books 
and records that both— 
‘‘(I) the broker from which the 
personal services entity receives com-
pensation is required to maintain and 
make available to the Commission and 
the applicable self-regulatory organi-
zation; and 
‘‘(II) the Commission determines 
necessary and appropriate to dem-
onstrate that the personal services en-
tity continues to meet the require-
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ments to not be considered a broker 
by reason of this subparagraph. 
‘‘(iii) DEFINITIONS.—In this subpara-
graph: 
‘‘(I) 
APPLICABLE
SELF-REGU-
LATORY
ORGANIZATION.—With 
re-
spect to a personal services entity or 
a 
registered 
representative 
of 
a 
broker, the term ‘applicable self-regu-
latory organization’ means each self- 
regulatory organization with which the 
related broker is required to be reg-
istered. 
‘‘(II) BROKER OR DEALER ACTIV-
ITY.—The term ‘broker or dealer ac-
tivity’ means an activity undertaken 
by a broker or a dealer who is reg-
istered, or required to be registered, 
under this Act. 
‘‘(III) IMMEDIATE FAMILY MEM-
BER.—With respect to an individual, 
the term ‘immediate family member’ 
means a spouse, child, parent, broth-
er, sister, grandparent, grandchild, 
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stepparent, stepchild, stepbrother, or 
stepsister of the individual. 
‘‘(IV) PERSONAL SERVICES ENTI-
TY.—The term ‘personal services enti-
ty’ means an entity that is established 
by a registered representative to re-
ceive compensation for the services of 
the registered representative and for 
administrative purposes and other 
benefits. 
‘‘(V) REGISTERED REPRESENTA-
TIVE.—With respect to a broker, the 
term ‘registered representative’ means 
a person who is— 
‘‘(aa) an ‘associated person 
of a broker or dealer’ with re-
spect to the broker; and 
‘‘(bb) registered with the ap-
plicable self-regulatory organiza-
tion.’’. 
(b) EFFECTIVE DATE.—Section 3(a)(4)(G) of the Se-
curities Exchange Act of 1934, as added by subsection (a), 
shall take effect on the date that is 180 days after the 
date of the enactment of this Act. 
Æ 
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