Broker Dealer Selling Agreement Template for the United States

A Broker Dealer Selling Agreement is a comprehensive legal contract that governs the relationship between a registered broker-dealer and selling firms or registered representatives who distribute securities and investment products. This agreement establishes the framework for authorized sales activities while ensuring compliance with complex federal and state securities regulations.

When do you need this document?

You need a Broker Dealer Selling Agreement when establishing distribution relationships for securities products, mutual funds, or other investment vehicles. This document is essential when a broker-dealer wants to expand its sales network through independent selling firms or when registered representatives join a broker-dealer's distribution system. The agreement is also required when restructuring existing distribution arrangements, entering new geographic markets, or launching new investment products that require specialized distribution channels. Financial institutions use this agreement to formalize relationships with third-party distributors while maintaining regulatory compliance.

Key legal considerations

Several critical legal elements must be carefully structured in your agreement. Compliance requirements form the backbone of the document, detailing obligations under SEC regulations, FINRA rules, and applicable state laws. The compensation structure must clearly define commission rates, payment schedules, and any performance-based incentives while ensuring compliance with suitability and best interest standards. Supervision and oversight provisions are crucial, establishing how the broker-dealer will monitor selling activities and maintain required books and records. Territorial limitations and product authorization clauses define the scope of selling rights and prevent unauthorized activities. Termination provisions must address regulatory notification requirements and the handling of pending transactions upon agreement termination.

Legal requirements in United States

Under United States law, Broker Dealer Selling Agreements must comply with the Securities Exchange Act of 1934, which governs broker-dealer operations and registration requirements. The Securities Act of 1933 mandates proper disclosure and registration procedures for securities offerings distributed under the agreement. FINRA rules impose specific requirements including Rule 2111 for suitability determinations, Rule 3110 for supervision systems, and Rule 4511 for books and records maintenance. The agreement must incorporate anti-money laundering provisions under the Bank Secrecy Act and customer identification procedures required by the USA PATRIOT Act. State securities laws may impose additional licensing and notification requirements depending on the jurisdictions where sales activities occur. Both parties must maintain appropriate registrations with the SEC and applicable state regulators throughout the agreement term.