Qualifications Frequently Asked Questions (FAQ) – Registration

  1. Who must register as a representative?
  2. Who must register as a principal?
  3. What registration is required to sell Municipal Fund Securities or 529 College Savings Plans?
  4. As a Series 24 or Series 26 Principal, can I supervise transactions in Municipal Fund Securities or 529 College Savings Plans?
  5. I am currently registered with Series 6 and 22. To supervise mutual fund and DPP sales, can I sit for the Series 24 examination?
  6. What are the registration and qualification requirements for a member firm's chief compliance officer?
  7. Does FINRA accept the NYSE Compliance Official Examination in lieu of the FINRA qualification examinations?
  8. Is there a registration requirement for chief compliance officers who are also general counsels?
  9. Is there a registration requirement for general counsels who are not chief compliance officers?
  10. Must the immediate supervisor of an active registered equity trader be registered under the Series 55?
  11. Can I solicit customer accounts once my firm submits the Form U-4 and fees for me to FINRA, but before my registration becomes effective?
  12. Can I continue to service my customers' accounts before my re-registration becomes effective with my new employer member?
  13. If a friend who is not registered with FINRA refers clients to me, may I pay him a commission for these referrals?
  14. Can I maintain an active registration with two FINRA member firms concurrently?
  15. How long will my qualification examinations be valid after I end my affiliation with a FINRA member firm?
  16. What do "CE inactive" or "CE 2-year termed" on my CRD registration mean?
  17. How do I reinstate my registration with FINRA-I've been out of the industry for more than two years?
  18. I passed the Series 7 test. Now I want to join a Direct Participation Program broker/dealer. Will I lose my general securities status if this new firm registers me as a DPP representative?
  19. I was a general securities principal. Now I am with a new firm and will only register as a general securities representative. Will I lose my principal status?
  20. After my firm submitted a Form U-4 and fees through the Web CRD system for me, I decided not to become registered with FINRA. I would like a refund of these fees.
  21. I am joining a FINRA member firm as a consultant to hold public seminars promoting its products and services. Should I register since this firm does not technically employ me?
  22. I am an independent contractor (not an employee) of a large insurance company. I refer potential customers to this firm. Should I become registered?
  23. Can a firm hire unregistered individuals whose sole function will be to cold call potential customers?
  24. A DPP broker/dealer firm hired me to wholesale its securities products to other broker/dealers. Do I have to register with FINRA to perform this function?
  25. While registered with member firm "A," can I sell limited partnership interests for non-member firm "B" in a private placement?
  26. A broker/dealer wants to employ me to sell securities only to institutions. I will not have any retail customers. Do I have to register with FINRA?
  27. I am currently registered with the Series 6. May I also become registered as an assistant representative-order processing?
  28. We have a staff of telephone operators who provide yield quotations to callers. Must they register with the Series 11?
  29. Must telephone operators at a member firm who accept unsolicited orders from customers register as assistant representatives-order processing?
  30. Must telephone operators at a member firm who accept unsolicited customer orders for transfers within a family of funds be registered with FINRA?
  31. Do I need to register if I will only be selling exempt securities?
  32. I am setting up a muni-only broker/dealer, how many principals must register with this firm? How must they register?
  33. I am setting up a broker/dealer that will deal in corporate securities and municipal securities transactions. How many principals must be registered with the firm? How must they register?

 

 

1. Who must register as a representative?
Anyone actively involved in the member's investment banking or securities business must be registered as a representative with FINRA. Their duties may include supervision, solicitation, or training of persons associated with the member.

[NASD Membership and Registration Rule 1031(b) - Definition of Representative]
2. Who must register as a principal?
Persons associated with a member, enumerated below, who are actively engaged in the management of the member's investment banking or securities business, including supervision, solicitation, conduct of business, or the training of persons associated with a member for any of these functions are designated as principals. Such persons shall include:

  • Sole Proprietors 
  • Officers 
  • Partners 
  • Managers of Offices of Supervisory Jurisdiction, and 
  • Directors of Corporations.


[NASD Membership and Registration Rule 1021(b) - Definition of Principal]
3. What registration is required to sell Municipal Fund Securities or 529 College Savings Plans?
In order to participate in municipal fund securities transactions, an associated person of a member firm would be required to register as a Municipal Securities Representative (Series 52), General Securities Representative (Series 7), or Investment Company Products/Variable Contracts Limited Representative (Series 6). For more information, refer to the MSRB Web site.
4. As a Series 24 or Series 26 Principal, can I supervise transactions in Municipal Fund Securities or 529 College Savings Plans?
In order to supervise transactions in these securities, the Series 24 or Series 26 principal will be required to register as a Municipal Fund Securities Principal and pass the Series 51 Examination. The study outline for this examination is available from the MSRB Web site.
5. I am currently registered with Series 6 and 22. To supervise mutual fund and DPP sales, can I sit for the Series 24 examination?
No. Series 6 and 22 do not satisfy the prerequisite requirement for the Series 24. You do, however, have two options. First, you could take the Corporate Securities Representative Examination (Series 62) which is a prerequisite for the Series 24. Or, second, you could take the Investment Company Products/Variable Contracts Limited Principal Examination (Series 26), and the Direct Participation Programs Limited Principal Examination (Series 39).

[NASD Membership and Registration Rules 1021(d) and 1022(a) - Application for Principal Status; and General Securities Principal]
6. What are the registration and qualification requirements for a member firm's chief compliance officer?
The chief compliance officer must be designated on Schedule A of a member's Form BD and must be registered as a General Securities Principal (Series 24). If the member's activities are limited to particular areas of the investment banking or securities business, the chief compliance officer may apply for a limited principal registration, such as the Limited Principal Investment Company and Variable Contracts Products (Series 26), Limited Principal Direct Participation Programs (Series 39), and Government Securities Principal. For more information refer to Notice to Members 01-51.
7. Does FINRA accept the NYSE Compliance Official Examination in lieu of the FINRA qualification examinations?
Yes, to avoid imposing duplicative examination requirements on dual NASD/NYSE members, FINRA will accept, for purposes of chief compliance officer registration, the NYSE Series 14 Compliance Official examination in lieu of the FINRA Series 24, Series 26, or Series 39 principal examinations. However, note that the chief compliance officers who passed the Series 14 Examination will be required to satisfy the pre-requisite requirement before the general securities principal approval is granted.
8. Is there a registration requirement for chief compliance officers who are also general counsels?
All chief compliance officers, including those who also serve as a firm's general counsel, must be registered in a principal capacity.
9. Is there a registration requirement for general counsels who are not chief compliance officers?
A firm's general counsel who solely provides legal advice and does not participate in the management of the member or have management level supervisory responsibilities is not required to register in a principal capacity. In addition, a member's general counsel may advise the firm's executive, management, or operations committees and avoid triggering the registration requirement if he or she only provides counsel and does not vote.
10. Must the immediate supervisor of an active registered equity trader be registered under the Series 55?
Yes. This is specifically required by NASD Rule 1032(f).
11. Can I solicit customer accounts once my firm submits the Form U-4 and fees for me to FINRA, but before my registration becomes effective?
No. You may not perform registered representative functions until your registration becomes effective with all regulatory organizations and state securities commissions. You may work in other areas at the securities firm if the tasks do not require registration.
12. Can I continue to service my customers' accounts before my re-registration becomes effective with my new employer member?
No. You may not transact any securities business until your registration with your new employer member becomes effective.
13. If a friend who is not registered with FINRA refers clients to me, may I pay him a commission for these referrals?
No. You cannot share commissions generated from securities transactions with non-registered individuals.
14. Can I maintain an active registration with two FINRA member firms concurrently?
FINRA does not prohibit an individual from maintaining concurrent registrations, but both member firms must agree to this arrangement. You must be sure that this dual affiliation does not violate the registration requirements of other regulatory organizations or state securities commissions.
15. How long will my qualification examinations be valid after I end my affiliation with a FINRA member firm?
You may reactivate your representative or principal exam up to two years after your registration has been terminated. (Note, the two years are calculated from the employment end date with the prior employer or from the CE inactive date.)

[NASD Membership and Registration Rules 1021(c) and 1031(c) - Requirements for Examination on Lapse of Registration]
16. What do "CE inactive" or "CE 2-year termed" on my CRD registration mean?
Any registered persons who have not completed the Continuing Education Regulatory Element program within the prescribed time frames will have their registrations deemed inactive until such time as the requirements of the program have been satisfied. Any person whose registration has been deemed inactive under Rule 1120(a)(2) shall cease all activities as a registered person and is prohibited from performing any duties and functioning in any capacity requiring registration. A registration that is inactive for a period of two years will be administratively terminated. A person whose registration is so terminated may reactivate the registration only by reapplying for registration and meeting the qualification requirements of the applicable provisions of the Rule 1020 Series and the Rule 1030 Series. 

[NASD Membership and Registration Rules 1120(a)(2) - Regulatory Element--Failure to complete]
17. How do I reinstate my registration with FINRA-I've been out of the industry for more than two years?
A member firm must sponsor you and you must re-qualify by examination.

[NASD Membership and Registration Rule 1021(c) and Rule 1031(c) - Requirements for Examination on Lapse of Registration]
18. I passed the Series 7 test. Now I want to join a Direct Participation Program broker/dealer. Will I lose my general securities status if this new firm registers me as a DPP representative?
You may join a DPP broker/dealer without losing your general securities status. This applies to re-registration in any limited representative category.

[NASD Membership and Registration Rule 1031-Registration Requirements]
19. I was a general securities principal. Now I am with a new firm and will only register as a general securities representative. Will I lose my principal status?
If you do not reregister as a principal within two years of your last principal registration, the principal qualification will lapse. You must then retest to function in that capacity in the future.

[NASD Membership and Registration Rules 1031(a) and 1031(c) - Registration Requirements; and Requirements for Examination on Lapse of Registration]
20. After my firm submitted a Form U-4 and fees through the Web CRD system for me, I decided not to become registered with FINRA. I would like a refund of these fees.
As stated in Schedule A to the FINRA By-Laws, fees are not refundable.

[Schedule A to NASD By-Laws, Resolution of the Board of Governors]
21. I am joining a FINRA member firm as a consultant to hold public seminars promoting its products and services. Should I register since this firm does not technically employ me?
The activity you describe requires registration as a representative or principal. Your employment status does not affect your involvement in the member's investment banking or securities business.

[NASD Membership and Registration Rules 1020 and 1030 Registration of Principal and Representative]
22. I am an independent contractor (not an employee) of a large insurance company. I refer potential customers to this firm. Should I become registered?
Under NASD rules, job performance determines the registration requirement. You must therefore be registered if you solicit client accounts for a member firm regardless of the terms of your contract with this firm.

[NASD Membership and Registration Rule 1021(b) and Rule 1031(b) - Definition of Principal and Definition of Representative]
23. Can a firm hire unregistered individuals whose sole function will be to cold call potential customers?
Member firms may employ unregistered individuals for the purposes of: Extending invitations to firm-sponsored events at which presentations and account or order solicitation will be conducted by appropriately registered personnel; Inquiring whether the prospective customer wishes to discuss investments with a registered person; Determining whether the prospective customer wishes to receive investment literature from the firm. The firms employing unregistered persons to perform these functions must be sure these employees do not discuss general or specific investment products or services offered by the firm, prequalify prospective customers as to financial status, investment history, and objectives, or solicit new accounts or orders.

[NASD Membership and Registration Rule 1031(b) - Definition of Representative]
24. A DPP broker/dealer firm hired me to wholesale its securities products to other broker/dealers. Do I have to register with FINRA to perform this function?
Yes. You must register with FINRA to function as a wholesaler because you will offer securities to other broker/dealers.

[NASD Membership and Registration Rule 1031(b) and Rule 1032(c) - Definition of Representative; and Limited Representative Direct Participation Programs]
25. While registered with member firm "A," can I sell limited partnership interests for non-member firm "B" in a private placement?
To participate in a private securities transaction, you must provide your employer member written notice describing the proposed transaction and your role in this activity. You must also notify your employer member whether you have received or will receive selling compensation in connection with the transaction. The member must provide you a written statement advising whether it approves or disapproves your participation in the proposed transaction. If the member allows such activity, the member must record the transaction(s) on its books and records. The member must also supervise your participation in the transaction.

[NASD Conduct Rule 3040 - Private Securities Transactions of an Associated Person]
26. A broker/dealer wants to employ me to sell securities only to institutions. I will not have any retail customers. Do I have to register with FINRA?
Yes. Under NASD rules anyone associated with a member who engages in the investment banking or securities business for the member must register. The rules do not distinguish between retail and institutional securities customers.

[NASD Membership and Registration Rules 1021 and 1031 - Registration Requirements for Principals and Representatives]
27. I am currently registered with the Series 6. May I also become registered as an assistant representative-order processing?
The assistant representative-order processing is a stand-alone registration category. An individual cannot maintain another valid registration concurrently with the Series 11. Your firm would, therefore, have to terminate your Series 6 registration before requesting the Series 11 for you.

[NASD Membership and Registration Rule 1042 - Registration of Assistant Representatives - Order Processing-Restrictions]
28. We have a staff of telephone operators who provide yield quotations to callers. Must they register with the Series 11?
No. If the operators provide published yield quotations only to the firm's clients, they do not have to be registered with FINRA in any capacity.
29. Must telephone operators at a member firm who accept unsolicited orders from customers register as assistant representatives-order processing?
Yes. If the operator accepts unsolicited customer orders from the firm's customers for execution by the member firm, the operator must be registered.

[NASD Membership and Registration Rule 1041(b) - Definition of Assistant Representative - Order Processing]
30. Must telephone operators at a member firm who accept unsolicited customer orders for transfers within a family of funds be registered with FINRA?
No. This function is considered clerical and does not require registration.
31. Do I need to register if I will only be selling exempt securities?
Yes. The terms "Exempt Securities" and "Exempt Transactions" mean these particular securities or transactions (private placements or intrastate offerings) are exempt from the filing requirements of the Securities Act of 1933. Anyone dealing with Exempt Securities and/or Exempt Transactions, however, must register.

[Securities Act of 1933 Sections 3 and 4]
32. I am setting up a muni-only broker/dealer, how many principals must register with this firm? How must they register?
The firm must have two qualified municipal securities principals and a financial and operations principal.

[MSRB Rule G-3(b)(I) and (ii) - Municipal Securities Principals and Financial and Operations Principals]
33. I am setting up a broker/dealer that will deal in corporate securities and municipal securities transactions. How many principals must be registered with the firm? How must they register?
The firm must have two qualified general securities principals, one municipal securities principal, and one financial and operations principal.

[NASD Membership and Registration Rules 1021(e), 1022(a) and (b) - Requirement of Two Registered Principals for New Applicants for Membership; Categories of Principal Registration-General Securities Principal and Limited Principal Financial and Operations]
Last Updated: 4/22/2003