Commercial banks are excluded from the broker-dealer definition unless they deal with selling securities.

• A. True
• B. False
• C. They are never excluded
• D. They must always register as broker-dealers

Answer: (A)

Commercial banks aren’t treated as broker-dealers by default. They’re excluded from the broker-dealer definition as long as they operate in their banking capacity. The moment a bank starts dealing in selling securities—such as underwriting, distributing, or acting as a broker for customers in securities trades—it is performing broker-dealer activities and must register. So the statement is correct: banks are excluded unless they engage in selling securities. For example, a bank that merely holds or advises on securities is outside the broker-dealer scope, but one that sells securities to customers would be a broker-dealer.