Clarity for Compensation Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7187 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 7187

 To amend the Securities Exchange Act of 1934 to provide an exemption
       from the definition of a broker for a certain registered
 representative-owned personal services entity, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 21, 2026

 Mr. Nunn of Iowa (for himself and Mr. Meeks) introduced the following
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 To amend the Securities Exchange Act of 1934 to provide an exemption
       from the definition of a broker for a certain registered
 representative-owned personal services entity, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clarity for Compensation Act''.

SEC. 2. BROKER DEFINITION EXCEPTION FOR REGISTERED REPRESENTATIVE-OWNED
              PERSONAL SERVICES 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 representative-owned
                personal services entity.--
                            ``(i) In general.--A personal services
                        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 direction of
                        such representative, if--
                                    ``(I) the broker instructs or
                                otherwise approves the amount and
                                timing 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 compensation on behalf of the
                                registered representative;
                                    ``(IV) the broker maintains
                                adequate supervision and control over
                                the registered representative;
                                    ``(V) the broker and the personal
                                services entity have a written
                                agreement governing their relationship
                                and the responsibilities of each party
                                regarding compensation arrangements;
                                    ``(VI) the personal services entity
                                is only owned by--
                                            ``(aa) the registered
                                        representative;
                                            ``(bb) if the registered
                                        representative is an
                                        individual, immediate family
                                        members of the registered
                                        representative; or
                                            ``(cc) entities wholly
                                        owned by--

                                                    ``(AA) the
                                                registered
                                                representative; or

                                                    ``(BB) if the
                                                registered
                                                representative is an
                                                individual, immediate
                                                family members of the
                                                registered
                                                representative; and

                                    ``(VII) the personal services
                                entity meets such other requirements as
                                the Commission may prescribe, by rule.
                            ``(ii) Oversight and examination.--In order
                        to ensure that a personal services entity that
                        is not considered a broker by reason of this
                        subparagraph continues to meet the requirements
                        to not be considered a broker by reason of this
                        subparagraph, the personal services entity
                        shall maintain, and make available upon request
                        to the Commission and the applicable self-
                        regulatory organization, all books and records
                        that both--
                                    ``(I) the broker from which the
                                personal services entity receives
                                compensation is required to maintain
                                and make available to the Commission
                                and the applicable self-regulatory
                                organization; and
                                    ``(II) the Commission determines
                                necessary and appropriate to
                                demonstrate that the personal services
                                entity continues to meet the
                                requirements to not be considered a
                                broker by reason of this subparagraph.
                            ``(iii) Definitions.--In this subparagraph:
                                    ``(I) Applicable self-regulatory
                                organization.--With respect to a
                                personal services entity or a
                                registered representative of a broker,
                                the term `applicable self-regulatory
                                organization' means each self-
                                regulatory organization with which the
                                related broker is required to be
                                registered.
                                    ``(II) Broker or dealer activity.--
                                The term `broker or dealer activity'
                                means an activity undertaken by a
                                broker or a dealer who is registered,
                                or required to be registered, under
                                this Act.
                                    ``(III) Immediate family member.--
                                With respect to an individual, the term
                                `immediate family member' means a
                                spouse, child, parent, brother, sister,
                                grandparent, grandchild, stepparent,
                                stepchild, stepbrother, or stepsister
                                of the individual.
                                    ``(IV) Personal services entity.--
                                The term `personal services entity'
                                means an entity that is established by
                                a registered representative to receive
                                compensation for the services of the
                                registered representative and for
                                administrative purposes and other
                                benefits.
                                    ``(V) Registered representative.--
                                With respect to a broker, the term
                                `registered representative' means a
                                person who is--
                                            ``(aa) an `associated
                                        person of a broker or dealer'
                                        with respect to the broker; and
                                            ``(bb) registered with the
                                        applicable self-regulatory
                                        organization.''.
    (b) Effective Date.--Section 3(a)(4)(G) of the Securities 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.
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