Clarity for Compensation Act
Summary
What This Bill Does
The bill creates an exception to the Securities Exchange Act broker definition for personal services entities receiving compensation from a registered representative's registered broker at that representative's direction. The entity may not hold itself out as a broker or perform other broker activity. Ownership is limited to the representative, specified immediate family members and entities wholly owned by those persons. The exception takes effect 180 days after enactment and remains subject to additional SEC rules.
Who Benefits and How
Registered representative business owners and their qualifying family-owned entities gain a way to receive compensation without separate broker status solely for that receipt. Broker compliance managers gain a defined framework for these arrangements. Customers gain safeguards added in the reported text: the entity must agree to the applicable self-regulatory dispute forum for enforcement of awards against the representative and be bound to the extent of its assets, while remaining subject to the specified securities-law obligations and remedies.
Who Bears the Burden and How
The registered broker must approve payment amount and timing, keep payment records, supervise both the representative and the entity, and sign a compensation agreement. Entity administrators must make covered books and records in their possession available to the SEC and applicable self-regulatory organizations. The reported text narrows that possession-based records wording but adds supervision and customer-recovery duties. This is not permission to conduct an unregistered brokerage business or a promise that every award will be fully collectible.
Key Provisions
- Provides a broker-definition exception solely for qualifying compensation receipt.
- Limits ownership, business activities and public representation of the personal services entity.
- Requires broker approval, records, supervision and a written compensation agreement.
- Requires customer-award enforcement commitments and preserves specified liabilities and remedies.
- Authorizes SEC conditions and delays effectiveness for 180 days.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Exempt qualifying representative-owned compensation entities from broker status while preserving supervision, records and customer recovery safeguards.
Key Policy Areas
Securities, Financial Regulation
Primary Purpose
Exempt qualifying representative-owned compensation entities from broker status while preserving supervision, records and customer recovery safeguards.
Policy Domains
Clarity for Compensation Act
Identified Gains
- Registered representative business owners
- Qualifying family-owned entity administrators
- Customers enforcing securities awards
Identified Costs
- Registered broker compliance managers
- Personal services entity recordkeeping staff
- Securities and Exchange Commission
Sponsors
Legislative Progress
ReportedPlaced on the Union Calendar, Calendar No. 691.
Reported (Amended) by the Committee on Financial Services. H. Rept. …
Additional sponsors: Ms. Pettersen, Mr. Lawler, Mr. Stutzman, Mr. Garbarino, …
Reported with amendments, committed to the Committee of the Whole …
Ordered to be Reported (Amended) by the Yeas and Nays: …
Committee Consideration and Mark-up Session Held
Referred to the House Committee on Financial Services.
Introduced in House
Mr. Nunn of Iowa (for himself and Mr. Meeks) introduced …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Qualifying representative-owned personal services entities, Registered securities brokers, Representative-owned personal services entities
Positive-direction: Qualifying representative-owned personal services entities
Negative-direction: Registered securities brokers, Representative-owned personal services entities
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "sro"
- → Each self-regulatory organization with which the related broker must register
- "broker"
- → Representative's registered broker
- "entity"
- → Qualifying representative-owned personal services entity
- "commission"
- → Securities and Exchange Commission
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology