Brokerage

Summary of Brokerage

A commission paid to a licensed foreign freight forwarder by an ocean carrier as an inducement to route cargo aboard the carrier's vessels. This commission usually runs between 1.25 and 2.5 percent of the freight paid to the carrier, although higher commission rates are not uncommon, depending upon the trade route and the volume of cargo available. Brokerage is paid in addition to any fees paid by the exporter to the forwarder, and constitutes a prime source of the forwarder's income. (Main Author: William J. Miller)

Broker-Dealer's Duties in the United States

Broker-Dealer's Duties when relying on the Securities Act Section 4(a)(4) in the United States

Section 5 of the Securities Act requires all offers and sales of securities in interstate commerce to be registered, unless an exemption from registration is available. Specifically, Sections 5(a) and 5(c) of the Securities Act generally prohibit any person, including broker-dealers, from using the mails or interstate means to sell or offer to sell, either directly or indirectly, any security unless a registration statement is in effect or has been filed with the Commission as to the offer and sale of such security, or an exemption from the registration provisions applies.

A prima facie case for a violation of Section 5 is established upon a showing that: (1) no registration statement was filed or in effect as to the offer and sale of the securities; (2) a person, directly or indirectly, sold or offered to sell the securities; and (3) the sale or offer to sell was made through the use of interstate facilities (including the mail).[See SEC v. Cavanagh, 445 F.3d 105, 111 n.13 (2d. Cir. 2006)] Scienter is not required to establish a Section 5 violation.[See SEC v. Calvo, 378 F.3d 1211, 1215 (11th Cir. 2004)] Once a prima facie violation of Section 5 is established, the burden shifts to the person claiming an exemption from registration to establish the availability of the claimed exemption.[See SEC v. Ralston Purina Co., 346 U.S. 119, 126 (1953)]

Brokerage in International Trade

Meaning of Brokerage, according to the Dictionary of International Trade (Global Negotiator): In shipping, a commission paid to a freight forwarder by a carrier for placing cargo, or a commission or fee paid to a shipbroker for arranging a vessel charter.

In insurance, a commission paid by an insurer to an agent placing coverage with it.