Delaware Securities License Requirements: A Comprehensive Guide

The Delaware Office of the State Bank Commissioner (OSBC) regulates securities professionals in Delaware. It administers state securities laws and oversees registration for four main types of professionals:

• Broker-dealers: Firms that buy and sell securities for customers or their own accounts.
• Agents: Individual sales representatives associated with broker-dealers or issuers.
• Investment advisers: Firms or individuals providing securities advice for compensation.
• Investment adviser representatives: Individuals acting on behalf of investment advisers.

Most applicants use FINRA's Central Registration Depository (CRD) system for broker-dealers and agents, or the Investment Adviser Registration Depository (IARD) for investment advisers and their representatives. Delaware uses these systems directly, so the process is similar to other states. For issues not covered by the online systems, contact the OSBC Securities Division.

Defining Securities Professionals in Delaware

Delaware's definitions are found in the Delaware Uniform Securities Act, Title 6, Chapter 73 of the Delaware Code.

Broker-Dealer

A broker-dealer is any person in the business of effecting securities transactions for others or their own account, according to 6 Del. C. §7302. This definition applies to firms, not individuals. A firm engaging in even one customer transaction in Delaware or soliciting Delaware residents generally must register.

Agent

An agent is an individual representing a broker-dealer or an issuer in securities transactions (6 Del. C. §7302). An officer or director of a broker-dealer is not automatically an agent unless they perform agent functions. Partners, officers, and directors of an issuer who handle the issuer's own securities are also agents, unless an exemption applies.

Investment Adviser

An investment adviser is any person who, for compensation, advises others on the value of securities or the advisability of investing in, purchasing, or selling securities (6 Del. C. §7302). Both the "for compensation" and "in the business of" conditions are important. A one-time, unpaid opinion does not qualify someone as an investment adviser.

Investment Adviser Representative

An investment adviser representative (IAR) is an individual associated with an investment adviser who makes recommendations, manages client accounts, determines advice, solicits clients, or supervises others performing these tasks (6 Del. C. §7302). Any IAR with a place of business in Delaware or who regularly services Delaware clients must register with the OSBC.

State-Registered vs. SEC-Registered Investment Advisers

The amount of assets under management (AUM) determines registration. Investment advisers with $110 million or more in AUM generally register with the SEC as "federal covered investment advisers." They are exempt from state registration but must file a notice with the OSBC. Advisers with less than $100 million AUM register with the OSBC. Those with $100 million to $110 million AUM have a choice. Consult the OSBC for details.