broker

1. One that acts as an agent for others, as in negotiating contracts, purchases, or sales in return for a fee or commission.
2. A stockbroker.
3. A power broker.

[Middle English, from Anglo-Norman brocour, abrocour, akin to Spanish alboroque, ceremonial gift at conclusion of business deal, from Arabic al-barka, the blessing, colloquial variant of al-baraka : al-, the + baraka, blessing, divine favor (from bāraka, to bless).]

WORD HISTORY   Giving gifts to one's broker might be justifiable from an etymological point of view because the word broker may be connected through its Anglo-Norman source, brocour, abrocour, with Spanish alboroque, meaning "ceremony or ceremonial gift after the conclusion of a business deal." If this connection does exist, "business deal" is the notion shared by the Spanish and Anglo-Norman words because brocour referred to the middleman in transactions. The English word broker is first found in Middle English in 1355, several centuries before we find instances of its familiar compounds pawnbroker, first recorded in 1687, and stockbroker, first recorded in 1706.

1. An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

2. The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.

3. A licensed real estate professional who typically represents the seller of a property. A broker's duties may include: determining market values, advertising properties for sale, showing properties to prospective buyers, and advising clients with regard to offers and related matters.

Investopedia Says:
Traditionally, only the wealthy could afford a broker and access the stock market. The Internet triggered an explosion of discount brokers; brokers that let you trade at a smaller fee, but don't provide personalized advice. Because of discount brokers, almost anybody can afford to invest in the market.

Related Links:
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Learn the clues you'll need to determine whether you've chosen a reputable professional. Is Your Broker Acting In Your Best Interest?
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Part of starting a successful career as a broker is finding the right place to work. Fitting In At Your Firm

agent authorized to buy or sell for another organization

or individual. See also dealer; list broker; manufacturer's

representative.

1. _Securities: Person acting as an Agent or intermediary between buyer and seller, usually charging a fee, or commission, for performing that service. Banks acting as brokers on behalf of their customers must register with the Securities and Exchange Commission and with the actual exchange where trading takes place. The Gramm-Leach-Bliley Act of 1999 exempts certain bank activities from SEC registration such as acting as a fiduciary or trustee or dealing in municipal securities. See also Dealer.

2. Mortgages: State-licensed person who, for a fee or commission, represents property owners in real-estate transactions. Some brokers act on behalf of borrowers in arranging mortgage financing and negotiating terms of sale.

A state-licensed Agent who, for a fee, acts for property owners in real estate transactions, within the scope of state law.
Example: A person wishing to sell or lease property often engages a broker to arrange the sale or locate tenants. A broker may also be engaged by a prospective buyer or tenant to locate acceptable property.

noun

Someone who acts as an intermediate agent in a transaction or helps to resolve differences: go-between, interceder, intercessor, intermediary, intermediate, intermediator, mediator, middleman. See means.

Brokers date back to the colonial period. The colony of Massachusetts, in the throes of a price inflation in 1748, adopted a tabular standard made up of an assortment of goods, in specified quantities, to be used as a test of the value of money. All money payments had to be made according to the changes in the value of money as reflected by this goods assortment. The astronomer Simon Newcomb suggested the need for managing money to achieve a stable price level in an article in the North American Review (September 1879). In 1911 the economist Irving Fisher outlined a plan for stabilizing the dollar in his Purchasing Power of Money and again in 1920 in his Stabilizing the Dollar. Fisher's system presupposed no gold coins in circulation. To correct the trend of the price level, he would increase or decrease the amount of gold representing a dollar, such dollars being disbursed in ingots and chiefly in international payments. In 1922 he wrote The Making of Index Numbers, explaining how to measure the price level scientifically. Americans were particularly conscious of price level changes at this time. In the previous sixty years wholesale prices had undergone wild fluctuations, more than doubling during the Civil War, falling by two-thirds between 1865 and 1896, rising moderately until 1913, more than doubling between 1914 and 1920, and plummeting 40 percent in one year, mid-1920 to mid-1921. All these changes had political repercussions, some of them severe.

Many prominent economists, who felt there must be some way to improve the situation, helped Fisher organize the Stable Money League in 1921. Because some league members differed with Fisher as to the appropriate solution, the organization changed its name that autumn to the National Monetary Association. Dissension among its members killed the association in early 1924. The next year Fisher promoted a new group called the Stable Money Association, whose avowed goal was educational instead of legislative. It nevertheless gave thinly veiled support to other bills by Goldsborough and by Rep. James G. Strong of Kansas. The organization died in 1932.

Meanwhile, a Cornell University agricultural economist, George F. Warren, also concluded that decreasing the gold content of the dollar was the way to raise the general price level. In early 1933 farm prices were only 59 percent of what they had been in "normal" 1926, and he felt that the way to restore prosperity, especially agricultural prosperity, was to raise the price level to that 1926 level. Warren influenced then Under Secretary of the Treasury Henry Morgenthau, Jr., his former student, who had the ear of President Franklin D. Roosevelt. The United States temporarily abandoned the gold standard in March 1933 and called in all gold coins. In a 22 October radio address, Roosevelt, discussing his gold purchase plan (to drive up the price of gold), said, "We are thus continuing to move toward a managed currency." On 30 January 1934, Congress passed the Gold Reserve Act and the next day, acting on its authority, the president created a new gold dollar (never coined) of 13.71 grains, 59 percent the size of the old gold dollar. There were other managed money bills introduced in the 1930s, especially by Rep. Wright Patman of Texas, who thought himself a modern "populist," but nothing came of them.

In the early 1960s a school of economists, soon known as monetarists, headed by Milton Friedman of the University of Chicago, achieved prominence. They believed that the quantity of money in circulation, measured in a sophisticated manner, greatly affected both the severity of business cycles and the general price level. Their solution was to increase the money supply by a steady 4 percent a year, the country's annual average rate of economic growth.

In the 1980s President Reagan appointed one of Friedman's allies, Alan Greenspan, as chairman of the Federal Reserve Board. The Fed's successful battle against inflation in the 1980s and 1990s, and the rapid growth of the American economy in those years, turned Greenspan into a national icon of prosperity and increased public confidence in the efficacy of monetarist policies. But the rapid increase in consumer debt and the proliferation of credit-card borrowing remain major challenges to efforts to manage the money supply.

Bibliography

Friedman, Milton. A Program for Monetary Stability. New York: Fordham University Press, 1960.

Greider, William. Secrets of the Temple: How the Federal Reserve Runs the Country. New York: Simon and Schuster, 1989.

Woodward, Bob. Maestro: Greenspan's Fed and the American Boom. New York: Simon and Schuster, 2000.

—Donald L. Kemmerer/T. G.

An individual or firm employed by others to plan and organize sales or negotiate contracts for a commission.

A broker's function is to arrange contracts for property in which he or she has no personal interest, possession, or concern. The broker is an intermediary or negotiator in the contracting of any type of bargain, acting as an agent for parties who wish to buy or sell stocks, bonds, real or personal property, commodities, or services. Rules applicable to agency are generally relevant to most transactions involving brokers. The client is considered the principal and the broker acts as the client's agent. An agent's powers generally extend beyond those of a broker. A distinguishing feature between an agent and a broker is that a broker acts as a middleperson. When a broker arranges a sale, he or she is an agent of both parties.

In order to determine whether or not an individual is acting as a broker in a transaction, the type of services that are performed must be examined.

Types of Brokers

There are several kinds of brokers, each of whom deals in different types of transactions.

A bill and note broker negotiates the buying and selling of bills of exchange and promissory notes.

A commercial or merchandise broker is an individual who works with buyers and sellers by negotiating between them in the buying and selling of goods, without having personal custody of the property. He or she offers services on a commission basis to manufacturers as a sales representative for their product. Such a broker has no control or possession of the product that is sent directly to the buyer; he or she merely acts as a middleperson in all transactions.

An insurance broker acts as an intermediary between the insurer and the insured and is distinguishable from an insurance agent. While an insurance agent is employed by, and represents, a particular insurance company, an insurance broker is a representative of the insured only. An insurance agent is bound by company rules and responsibilities, whereas an insurance broker's only duty is to aid a client. He or she owes no obligation to any company.

Real estate brokers or agents are hired to transact the buying and selling, lease, or rental of real property on a commission basis. They can also be involved with the purchase and sale of lands, and the acquisition of mortgages for others. They may also counsel and advise people who wish to buy or sell real estate.

Stockbrokers buy and sell shares in corporations and deal in corporation stock and in other securities. A stockbroker's functions are generally broader than those of other brokers. As more than a mere negotiator, he or she makes a purchase in his or her own name, and ordinarily pays the purchase price. A stockbroker is often responsible for the possession of the securities with which he or she deals. Conversely, an ordinary broker neither has title to, nor possession of, property that is being purchased or sold. As stockbrokers serve in a greater capacity, their responsibilities also extend beyond those of ordinary brokers.

Regulation and Conduct of Business

The business or occupation of a broker may be regulated by the state under its police power. A municipal corporation has the power to regulate brokers who function within its boundaries if authority to do so is granted by the state.

In order for a broker to engage in business, he or she is generally required to acquire a license and pay a fee. Brokers who conduct business without a license can be fined by state licensing authorities. Some states make it illegal for any person other than a licensed broker to be paid for services concerning real estate transactions.

Laws exist that impose a license tax on brokers. Within the meaning of such laws, any individual who regularly works as a middleperson or negotiates business transactions for the benefit of others is ordinarily considered a broker. It has been held by a federal court that a statute requiring brokers to obtain a license was only applicable to those people regularly employed as brokers. An individual only casually involved in brokerage through the arrangement of only a few sales would not be considered to be engaged in the business of brokerage.

Revocation of License

The state's concerns regarding brokers extend beyond initial licensing to the establishment of conditions for the maintenance of a license. The state may provide for the revocation or suspension of brokers' licenses for reasonable grounds.

The power to revoke a license may be vested in a specially designated commission that exists primarily to hear complaints about the fraudulent practices of brokers. Such proceedings are ordinarily informal, and technical court rules generally are not observed.

During a hearing, the commission is presented with evidence relating to the broker's conduct and must consider whether such conduct warrants denial of the privilege to engage freely in business.

Grounds for revocation of a license are generally based upon fraud, dishonesty, incompetence, or bad faith in dealing with the public. A real estate broker's license may be revoked or suspended because of misrepresentation used to effect a purchase or sale. Generally, the conduct of a broker in negotiating a real estate transaction on behalf of his or her principal is subject to strict fraud and deceit standards, equal to those imposed on his or her principal. It has been held by some courts that the failure of a broker to disclose material facts within his or her knowledge will create liability. Within the meaning of fraud is the pretense of knowledge on the part of the broker while executing a real estate transaction where no knowledge actually exists — for example, while selling a house a broker states that there are no concealed defects in the house, although he or she does not actually know whether such defects exist or not.

A real estate broker's license may be suspended or revoked if duties are performed unlawfully. In addition, a broker's license can be revoked or suspended if a broker is guilty of racial discrimination in the selling and leasing of property.

Stockbrokers may be liable for various unethical activities, such as churning, which is the unnecessary trading of stocks to gain additional commissions. A consumer protection organization, the Securities Investor Protection Corporation (SIPC), has been established by Congress to aid customers of securities concerns that go out of business.

Bonds

State regulations usually require that brokers, especially those engaged in the real estate business, deliver a bond to insure faithful performance of their duties. The liability of the surety guaranteeing such a bond extends only to transactions that arise during the normal course of the broker's business and that are intended to be included in the bond.

Commissions

A broker is ordinarily compensated for services by the payment of a commission, based upon a portion of the value of the property in a particular transaction.

Generally, a commission is earned when negotiations by buyer and seller are completed, and an agreement is reached. It is customary for a broker to deduct and reserve the amount of commission from funds obtained by him or her for a client. The ordinary basis for the calculation of a percentage commission is the total sale price of whatever is sold.

In order for a broker to be entitled to a com- mission, a sale must be completed for which the broker has been employed.

The broker's right to a commission is not dependent upon the finalization of the transaction unless otherwise agreed upon by the broker and by his or her client.

The compensation of a broker is based upon procurement of a client who is willing and able to purchase. The specific terms of the transaction must be satisfactory to the broker's client. Of paramount importance is the prospective buyer's ability to provide the required funds at the suitable time. A broker who has properly performed his or her duties should not be denied a commission due to a failure by the parties to consummate the deal.

In the absence of any agreement to be employed by a client, a broker is not to be compensated for voluntary services. Similarly, compensation is not due a broker when a sale is made by an owner after the broker-client relationship has been terminated. A common type of termination is the expiration of a real estate listing. This rule against the payment of a commission is absolute — regardless of whether or not the sale is made to an individual whom the broker initially produced — provided the broker was given ample opportunity to complete the transaction and failed to do so. Once a broker has earned his or her commission, a client may not terminate the relationship and complete the transaction himself or herself in order to avoid paying the broker.

Any fraudulent misrepresentations or evidence of bad faith on the part of the broker will defeat his or her right to a commission. Mere negligence in the execution of duties, in the absence of bad faith, does not automatically defeat a broker's right to compensation.

See: civil rights.

A financial agent or intermediary; a middleman.

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Dansk (Danish)
n. - foged, mægler
v. tr. - optræde som mægler, formidle

Nederlands (Dutch)
tussenpersoon, makelaar

Français (French)
n. - courtier (en bourse), agent de change, (Comm) courtier, (Naut) courtier maritime, brocanteur
v. tr. - servir de médiateur dans, arranger

Deutsch (German)
n. - Händler , Makler, Wertpapiermakler, Zwischenperson
v. - handeln, vermitteln

Ελληνική (Greek)
n. - μεσίτης, πράκτορας, χρηματιστής, χρηματομεσίτης

Italiano (Italian)
agente di borsa

idioms:

• marriage broker    sensale di matrimonio

Português (Portuguese)
n. - corretor (m)

idioms:

• marriage broker    agente (m) (f) matrimonial

Русский (Russian)
брокер, маклер, посредник

idioms:

• marriage broker    сват/сваха

Español (Spanish)
n. - intermediario
v. tr. - hacer de intermediario, intermediar

Svenska (Swedish)
n. - mäklare, mellanhand

中文（简体）(Chinese (Simplified))
掮客, 经纪人, 以代理人安排

中文（繁體）(Chinese (Traditional))
n. - 掮客, 經紀人
v. tr. - 以代理人安排

한국어 (Korean)
n. - 중개인, 고물상
v. tr. - 중개하다

日本語 (Japanese)
n. - ブローカー, 株式仲買人, 古物商, 質屋

العربيه (Arabic)
‏(الاسم) سمسار أسهم, وسيط, دلال‏

עברית (Hebrew)
n. - ‮סוכן בורסה, ברוקר, מתווך, כונס נכסים, תיווך‬
v. tr. - ‮תיווך‬

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