Stock brokerage contracting

An individual or firm employed by others to plan and organize sales or negotiate contracts for a commission. A broker's function is to arrange contracts for property in which he or she has no personal interest, possession, or concern.

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The broker is an intermediary or negotiator in the contracting of any type of bargain, acting as an agent for parties who wish to buy or sell stocks, bonds, real or Personal Property , commodities, or services.

Rules applicable to agency are generally relevant to most transactions involving brokers.

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The client is considered the principal and the broker acts as the client's agent. An agent's powers generally extend beyond those of a broker. A distinguishing feature between an agent and a broker is that a broker acts as a middleperson.

When a broker arranges a sale, he or she is an agent of both parties. In order to determine whether or not an individual is acting as a broker in a transaction, the type of services that are performed must be examined. A bill-and-note broker negotiates the buying and selling of bills of exchange and promissory notes.

A commercial or merchandise broker is an individual who works with buyers and sellers by negotiating between them in the buying and selling of goods, without having personal custody of the property. He or she offers services on a commission basis to manufacturers as a sales representative for their product. Such a broker has no control or possession of the product that is sent directly to the buyer; he or she merely acts as a middleperson in all transactions.

An insurance broker acts as an intermediary between the insurer and the insured and is distinguishable from an insurance agent. While an insurance agent is employed by, and represents, a particular insurance company, an insurance broker is a representative of the insured only.

An insurance agent is bound by company rules and responsibilities, whereas an insurance broker's only duty is to aid a client. He or she owes no obligation to any company.

Real estate brokers or agents are hired to transact the buying and selling, lease, or rental of real property on a commission basis. They can also be involved with the purchase and sale of lands, and the acquisition of mortgages for others.

They may also counsel and advise people who wish to buy or sell real estate. Stockbrokers buy and sell shares in corporations and deal in corporation stock and in other Securities. A stockbroker's functions are generally broader than those of other brokers. As more than a mere negotiator, he or she makes a purchase in his or her own name and ordinarily pays the purchase price.

A stockbroker is often responsible for the possession of the securities with which he or she deals. Conversely, an ordinary broker neither has title to, nor possession of, property that is being purchased or sold.

As stockbrokers serve in a greater capacity, their responsibilities also extend beyond those of ordinary brokers. The business or occupation of a broker may be regulated by the state under its Police Power. A Municipal Corporation has the power to regulate brokers who function within its boundaries if authority to do so is granted by the state. In order for a broker to engage in business, he or she is generally required to acquire a license and pay a fee.

Brokers who conduct business without a license can be fined by state licensing authorities. In some states it is illegal for any person other than a licensed broker to be paid for services concerning real estate transactions.

Laws exist that impose a license tax on brokers. Within the meaning of such laws, any individual who regularly works as a middleperson or negotiates business transactions for the benefit of others is ordinarily considered a broker. It has been held by a federal court that a statute requiring brokers to obtain a license was only applicable to those people regularly employed as brokers. An individual only casually involved in brokerage through the arrangement of only a few sales would not be considered to be engaged in the business of brokerage.

Revocation of License The state's concerns regarding brokers extend beyond initial licensing to the establishment of conditions for the maintenance of a license.

The state may provide for the revocation or suspension of brokers' licenses for reasonable grounds. The power to revoke a license may be vested in a specially designated commission that exists primarily to hear complaints about the fraudulent practices of brokers. Such proceedings are ordinarily informal, and technical court rules generally are not observed.

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During a hearing, the commission is presented with evidence relating to the broker's conduct and must consider whether such conduct warrants denial of the privilege to engage freely in business. Grounds for revocation of a license are generally based upon Fraud , dishonesty, incompetence, or bad faith in dealing with the public.

A real estate broker's license may be revoked or suspended because of Misrepresentation used to effect a purchase or sale. Generally, the conduct of a broker in negotiating a real estate transaction on behalf of his or her principal is subject to strict fraud and deceit standards, equal to those imposed on his or her principal. It has been held by some courts that the failure of a broker to disclose material facts within his or her knowledge will create liability.

Within the meaning of fraud is the pretense of knowledge on the part of the broker while executing a real estate transaction where no knowledge actually exists—for example, while selling a house a broker states that there are no concealed defects in the house, although he or she does not actually know if such defects exist. A real estate broker's license may be suspended or revoked if duties are performed unlawfully. In addition, a broker's license can be revoked or suspended if a broker is guilty of racial discrimination in the selling and leasing of property.

Stockbrokers may be liable for various unethical activities, such as churning, which is the unnecessary trading of stocks to gain additional commissions. A Consumer Protection organization, the Securities Investor Protection Corporation SIPC , has been established by Congress to aid customers of securities concerns that go out of business.

Bonds State regulations usually require that brokers, especially those engaged in the real estate business, deliver a bond to insure faithful performance of their duties. The liability of the surety guaranteeing such a bond extends only to transactions that arise during the normal course of the broker's business and that are intended to be included in the bond.

Commissions A broker is ordinarily compensated for services by the payment of a commission, based upon a portion of the value of the property in a particular transaction. Generally, a commission is earned when negotiations between a buyer and seller are completed, and an agreement is reached. It is customary for a broker to deduct and reserve the amount of commission from funds obtained by him or her for a client.

The ordinary basis for the calculation of a percentage commission is the total sale price of whatever is sold. In order for a broker to be entitled to a commission, a sale must be completed for which the broker has been employed.

The broker's right to a commission is not dependent upon the finalization of the transaction unless otherwise agreed upon by the broker and by his or her client. The compensation of a broker is based upon procurement of a client who is willing and able to purchase.

The specific terms of the transaction must be satisfactory to the broker's client. Of paramount importance is the prospective buyer's ability to provide the required funds at the suitable time.

A broker who has properly performed his or her duties should not be denied a commission due to a failure by the parties to consummate the deal. In the absence of any agreement to be employed by a client, a broker is not to be compensated for voluntary services. Similarly, compensation is not due a broker when a sale is made by an owner after the broker-client relationship has been terminated.

A common type of termination is the expiration of a real estate listing. This rule against the payment of a commission is absolute—regardless of whether or not the sale is made to an individual whom the broker initially produced—provided the broker was given ample opportunity to complete the transaction and failed to do so.

Once a broker has earned his or her commission, a client may not terminate the relationship and complete the transaction himself or herself in order to avoid paying the broker.

Any fraudulent misrepresentations or evidence of bad faith on the part of the broker will defeat his or her right to a commission. Mere Negligence in the execution of duties, in the absence of bad faith, does not automatically defeat a broker's right to compensation. Technology affected the roles of practically all types of brokers.

Probably the most significant developments have been related to communications, as new technologies have allowed brokers to communicate with their clients in a variety of means, thus enhancing the ability of the brokers to serve their clients' interests. Some changes were different methods in day-to-day communications, such as the common use of E-Mail and fax machines.

The rise in Internet usage in the s also caused a number of changes, as registered brokers began to serve as online customer service representatives for prospective buyers. Economic problems in the early s slowed the development of the role of the broker, but as new technologies continue to develop, the role of the broker was expected to continue to evolve. Selecting and Working with a Broker.

Texas Agricultural Extension Center. Contracts ; Fraud ; Insured ; Insurer ; License ; Principal ; Securities. Brokers in the more technical fields as above are regulated and licensed by each state and have a "fiduciary" duty to act in the best interests of the customer. Consumers should investigate whether the broker is representing the customer's best interest or just wants to make a sale.

A "pawn broker" is a lender for items left for security "hocked" at high rates. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only.

This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Broker legal definition of broker http: Dictionary, Encyclopedia and Thesaurus - The Free Dictionary 9,,, visitors served. A A A A Language: Register Log in Sign up with one click: Dictionary Thesaurus Medical Dictionary Legal Dictionary.

Tools A A A A Language: Free content Linking Lookup box. Broker An individual or firm employed by others to plan and organize sales or negotiate contracts for a commission. Types of Brokers There are several kinds of brokers, each of whom deals in specific types of transactions. Regulation and Conduct of Business The business or occupation of a broker may be regulated by the state under its Police Power. Future Roles of Brokers Technology affected the roles of practically all types of brokers.

Further readings Hazen, Thomas Lee. Broker-Dealer Regulation in a Nutshell. Cross-references Contracts ; Fraud ; Insured ; Insurer ; License ; Principal ; Securities.

Please log in or register to use bookmarks. Write what you mean clearly and correctly. References in classic literature? On the third afternoon, Aynesworth met on the stairs a young broker , whom he had come across once or twice during his earlier dealings in the shares.

Aynesworth found his employer alone with his broker , who was just hastening off to keep an appointment. Wingrave," he said, "you have just had a young broker named Nesbitt on. I wish to buy, if possible, the whole of the shares, and as many more as I can get brokers to sell.

The machine sitting at that desk was no longer a man; it was a busy New York broker , moved by buzzing wheels and uncoiling springs. He who has been denied the spectacle of a busy Manhattan broker during a rush of business is handicapped for the profession of anthropology. In the midst of this growing and important stress the broker became suddenly aware of a high-rolled fringe of golden hair under a nodding canopy of velvet and ostrich tips, an imitation sealskin sacque and a string of beads as large as hickory nuts, ending near the floor with a silver heart.

Rebecca was entirely surprised at the sight of the comfortable old house where she had met with no small kindness, ransacked by brokers and bargainers, and its quiet family treasures given up to public desecration and plunder. Meanwhile he was popular with his fellow brokers , respected by his clients, and beloved at home, but his spirit was restless within him and his mind chafed unceasingly against his surroundings.

After a short conference with his brokers , he proceeded to his hotel, on the way picking up the evening papers and glancing at the head-lines. Bankers, farmers, sailors, cotton-planters, brokers , merchants, watermen, magistrates, elbowed each other in the most free-and-easy way.

We therefore, who are the registers of that lottery, shall imitate those sagacious persons who deal in that which is drawn at Guildhall, and who never trouble the public with the many blanks they dispose of; but when a great prize happens to be drawn, the newspapers are presently filled with it, and the world is sure to be informed at whose office it was sold: Brokenstraw Valley Area Authority broker Broker Associate Broker Association Broker Associations Broker Booth Support System Broker Call broker call loan Broker Call Loans Broker Calls broker comparison Broker Dealer Broker Dealer Broker Dealer Broker Dealer Financial Services Corp.

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