H.R. 7187
Clarity for Compensation Act
Official summary
Written by the Congressional Research Service.
Clarity for Compensation Act
This bill allows individuals who work for registered brokers to receive compensation for their services through their own personal businesses without having to register with the Securities and Exchange Commission (SEC).
Specifically, the bill exempts certain personal services entities from SEC broker regulations.
As background, brokers (persons engaged in the business of making securities transactions on behalf of others) must register with the SEC and become members of a self-regulatory organization (SRO). Under this bill, a personal services entity is an entity established by a registered representative to receive compensation for services from the registered representative's broker. A registered representative works for the broker (deemed an associated person of the broker) and is registered with the appropriate SRO.
Under this bill, a personal services entity is not considered a broker for SEC regulatory purposes when receiving compensation from the registered representative's broker on the registered representative's behalf if
- the broker approves and maintains records of the payment,
- the personal services entity does not hold itself out as a broker or otherwise engage in broker or dealer activity,
- the broker exercises adequate supervision and control over the registered representative,
- the broker and personal services entity have a written agreement regarding their relationship and compensation arrangement, and
- the personal services entity is owned by the representative, the representative's family, or other similar entities.
The personal services entity must maintain certain records and make them available to the SEC and the appropriate SRO upon request.
Text of the bill
Where this section came from
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Jan 21, 2026 · Introduced in House Referred to House Committee on Financial Services, Jan 21
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Sep 1, 2026 · Reported in House Marked up by House Committee on Financial Services, Jun 30 Reported by House Committee on Financial Services, Sep 1 Committee members' individual votes aren't in our records.
… 3 unchanged passages …
(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 registered broker at the direction of such representative, if— (I) the representative’s registered 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
any
or
other
dealer
broker
activity, other than the receipt of compensation on behalf of the registered representative; (IV) the
representative’s registered
broker maintains adequate supervision and control over the registered representative
and the personal services entity
; (V) the
representative’s registered
broker and the personal services entity have a written agreement governing their relationship and the responsibilities of each party regarding compensation arrangements;
… 5 unchanged passages …
(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
; and (VIII) the personal services entity, with respect solely to the resolution of disputes with, and recovery by, customers— (aa) agrees in writing— (AA) to submit to the jurisdiction of a dispute resolution forum of the applicable self-regulatory organization solely for the purposes of enforcement of any award rendered against the registered representative arising from the securities business of the registered representative; and (BB) to be bound by any such award to the extent of assets held by the personal services entity; and (bb) remains subject to all financial obligations, liabilities, and remedies of the registered representative under applicable Federal securities laws, the rules of the applicable self-regulatory organization, and the securities laws of any State with respect to such securities business
. (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
for
not
the
be
exception
considered
under
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
in
both
the possession of the personal services entity that
—
… 1 unchanged passage …
(II) the Commission determines necessary and appropriate to demonstrate that the personal services entity continues to meet the requirements
to
for
not
the
be
exception
considered
under
a broker by reason of
this subparagraph.
… 2 unchanged passages …
(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.
… 1 unchanged passage …
(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
other
purposes
activity
and
that
other
is
benefits
not securities-related
.
… 5 unchanged passages …
What is a markup?
A markup is a committee meeting where members go through a bill and vote on changes before sending it to the full chamber.
(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 registered broker at the direction of such representative, if—
(I) the representative’s registered 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 any other broker activity, other than the receipt of compensation on behalf of the registered representative;
(IV) the representative’s registered broker maintains adequate supervision and control over the registered representative and the personal services entity;
(V) the representative’s registered 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;
(VII) the personal services entity meets such other requirements as the Commission may prescribe, by rule; and
(VIII) the personal services entity, with respect solely to the resolution of disputes with, and recovery by, customers—
(aa) agrees in writing—
(AA) to submit to the jurisdiction of a dispute resolution forum of the applicable self-regulatory organization solely for the purposes of enforcement of any award rendered against the registered representative arising from the securities business of the registered representative; and
(BB) to be bound by any such award to the extent of assets held by the personal services entity; and
(bb) remains subject to all financial obligations, liabilities, and remedies of the registered representative under applicable Federal securities laws, the rules of the applicable self-regulatory organization, and the securities laws of any State with respect to such securities business.
(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 for the exception under 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 in the possession of the personal services entity that—
(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 for the exception under 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 activity. The term broker 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 other activity that is not securities-related.
(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.