Also known as: stockbrokers · broker
Written by attorneys · grounded in primary & secondary sources — see below
A person who buys or sells securities as an agent for another.
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Southland Foods regularly purchased grain through its stockbroker, Spencer Silver, who handled all commodity futures trades. When Southland Foods later sold packaged flour products, a buyer argued the company lacked merchant status under the UCC. The court attributed specialized knowledge to Southland Foods because its stockbroker held himself out as having skill in the relevant markets.
Sierra Santos listed her securities portfolio with stockbroker Samuel Soto under an agreement promising a commission upon locating a ready buyer. Soto produced a purchaser willing to pay the listed price, but Sierra Santos refused to complete the sale. The court awarded Soto his commission because he had fulfilled the terms of the listing.
Solomon Silver, acting as stockbroker for Sapphire Holdings, sent a signed confirmation of a securities purchase exceeding five hundred dollars. The client later denied the deal, claiming no enforceable contract existed. The court held the confirmation satisfied the statute of frauds because the stockbroker was an authorized agent.
Stockbroker Simon Stern learned of an impending takeover while processing client orders. He purchased shares for his own account without disclosing the information to the sellers. The court examined whether Stern's silence alone created liability under the securities laws.
Stockbroker Sydney Santos received a tip from a corporate insider about an upcoming merger. Santos traded on the information and shared it with select clients. The court analyzed whether Santos owed a fiduciary duty that would make the trades unlawful.
Stockbroker Sierra Santos placed orders for Australian bank shares on behalf of U.S. clients through an overseas exchange. When the transactions later became the subject of litigation, the court considered whether U.S. securities laws reached the foreign trades.
A stockbroker can cause a client to be treated as a merchant when the broker holds himself out as having specialized knowledge or skill in the goods involved in the transaction.
Supporting sources
A stockbroker earns a commission upon producing a buyer ready, willing, and able to purchase on the seller's terms, or upon execution of the contract, depending on the listing agreement.
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A stockbroker's signed record confirming a sale of goods for five hundred dollars or more satisfies the statute of frauds when the broker acts as an authorized agent for the party to be charged.
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…might run afoul of § 10 (b).[^maj-7] The SEC took an important step in the development of § 10 (b) when it held that a broker-dealer and his firm violated that section by selling securities on the basis of undisclosed information obtained from a director of the issuer corporation who was also a registered…