What constitutes a controlling person under the federal securities laws? While we have previously considered this question, we address it again today in hopes of dissipating some of the uncertainty obscuring this often litigated area of securities law.
This is a consolidated appeal of actions brought by Verne Buhler (“Buhler”) and Norma J. Cleveland (“Cleveland”) for securities violations in the sale of tax shelters. The district court granted summary judgment for Anchor National Financial Services (“Anchor”), finding no liability as a controlling person. We affirm.
I. BACKGROUND
Anchor is a securities broker-dealer with its principal office in Phoenix, Arizona. Anchor sells insurance policies, is a member of the National Association of Security Dealers, and licenses salespersons throughout the country who sell securities for it. These persons are also licensed by the states in which they sell. Defendants Audio Leasing (“Audio”) and Jerden Industries (“Jerden”) are corporations which leased and/or sold investments in “master recordings” as tax shelters.1
Buhler, Cleveland, and other claimants invested in the Audio and/or Jerden tax shelters through regional sales offices with salespersons licensed by Anchor or salespersons working for Anchor licensees. One of the sales offices was Creative Tax Shelters (“CTS”), a corporation in Bend, Oregon, which was owned by Bryson Reinhardt. CTS was operated by Reinhardt and Norman Bethany, both of whom were Anchor licensees and Anchor “principals” in that they oversaw sales by other Anchor licensees in the CTS office. They also oversaw sales by other CTS personnel who were not licensed by Anchor but were working for Anchor licensees in the CTS office.
In its endeavor to sell securities and license salespersons, Anchor established internal rules which allowed its licensees to sell only those securities approved by Anchor. The Audio and Jerden tax shelters were not recognized by Anchor as approved securities. Accordingly, while Anchor received a commission on sales of securities it had approved, no commissions or revenues were received from the sale of the Jerden or Audio shelters. The sale of unapproved securities, known as “off-book” sales, was never reported to Anchor and the Anchor name was never mentioned *835or disclosed in the course of the sale of the Jerden and Audio tax shelters. When Anchor was informed by the Oregon Securities Commission that a number of its licensees were suspected of violating state securities laws in connection with the Jerden and Audio tax shelters, Anchor revoked their licenses for violating the internal rule prohibiting the sale of unapproved securities.
When Buhler, Cleveland, and the other claimants failed to realize the tax benefits they had anticipated, they brought this action alleging the tax shelters were unregistered securities sold by misrepresentations and omissions of material fact in violation of federal and Oregon state securities laws. They also alleged additional theories of liability, including respondeat superior, fraud, failure to supervise, aiding and abetting, conspiracy, and a pattern of racketeering activity. Buhler sued Audio and other parties involved in the sales, while Cleveland sued Jerden and the similarly involved parties. Anchor was joined as a common defendant.
The district court granted Anchor’s motion for summary judgment, finding Anchor was not a controlling person within the meaning of the federal securities laws. Anchor was also granted summary judgment on the numerous additional theories of liability. On appeal, claimants allege error only with respect to the controlling person finding under federal law.
II. ANCHOR’S LACK OF POWER
Under Section 15 of the Securities Act of 1933 (15 U.S.C. § 77o)2 and Section 20 of the Securities Exchange Act of 1934 (15 U.S.C. § 78t(a)),3 secondary liability is imposed upon “controlling persons.” To establish that a defendant is a controlling person, a plaintiff must show that: (1) the defendant had actual power or influence over the alleged controlled person, and (2) the defendant was a culpable participant in the alleged illegal activity. Kersh v. General Council, 804 F.2d 546, 549 (9th Cir. 1986) (citing Christoffel v. E.F. Hutton & Co., Inc., 588 F.2d 665, 668 (9th Cir.1978)). Whether a defendant has power or influence over an allegedly controlled person is a question of fact. Kersh, 804 F.2d at 548.
Claimants argue Anchor had actual control over CTS personnel. As evidence of Anchor’s control, claimants point to the fact that Anchor had principals in the CTS office.4 However, we find this insufficient *836to establish control. The principals were directed to follow the internal rules requiring Anchor approval of the securities sold. The tax shelters involved here had never been approved by Anchor, nor were they submitted for Anchor’s approval. The sales were off-book, with no commissions, revenues or indirect benefits received by Anchor and its name was not used in the sales. The CTS office was operated independently from Anchor and no nexus existed between CTS and Anchor with respect to the Audio and Jerden tax shelters.5 While Anchor may have licensed the sellers of the shelters, without more, this is insufficient to establish control. Kersh at 550. Anchor did not participate in the tax shelter sales and had no actual power over their licensees.
III. ANCHOR’S LACK OF PARTICIPATION
Claimants also argue that Anchor’s failure to adequately supervise its licensees is indirect participation in the tax shelter sales scheme. Claimants cite Hecht v. Harris, Upham & Co., 430 F.2d 1202 (9th Cir.1970), to support this contention.
We acknowledge “indirect participation,” commonly referred to as the “broker-dealer rule,” is a theory for establishing the culpable participation component in the context of security broker-dealers. See, e.g., Kersh, at 804 F.2d at 550; Hecht, 430 F.2d at 1210. However, the failure to supervise does not constitute participation here.6
We believe that Anchor had no duty to supervise the off-book sales in the circumstances presented here. Anchor had no knowledge that the off-book sales were being made, and it had adopted rules against sales of unapproved securities. Anchor received no income from the sales, nor were the sales made from Anchor’s offices or under its logo. The sales were not made to regular customers of Anchor, or to persons depending on Anchor’s participation in any way. Anchor’s conduct was limited to the mere licensing of salespersons to sell securities approved by Anchor. We cannot draw from that fact alone a duty to supervise the unauthorized actions of those salespersons, or of others acting with them, that are the subject of these lawsuits. Since Anchor had no duty, it follows that Anchor’s inaction cannot be characterized as participation.7
IV. CONCLUSION
The grant of summary judgment in favor of Anchor was correct. There' is no evidence Anchor had actual power over the Jerden and Audio tax shelter sales and no indication that Anchor participated in the sales by failing to provide a more extensive regimentation of supervision.