Effective June 16, 2014, FINRA will modify the Series 26 exam. The changes affect the structure of the outline, the distribution of the exam questions, and the content tested on the exam. The total number of scored and unscored questions and the score required to pass remain unchanged.
The structure of the new outline places topics into three “functions” (job responsibilities of an investment company and variable contracts products principal). These functions are then broken down into specific tasks as subsections. This is in contrast to the old outline, which has five broad sections and had subsections based on topics and/or rules.
The question distribution for the exam will change alongside the outline format. There is less of a focus on hiring and qualification and training of representatives. There is an increased focus on supervision, sales practices, and business processing and recordkeeping rules. According to FINRA, “the questions on the revised Series 26 examination place greater emphasis on key tasks such as supervision of registered persons, sales practices and compliance.” FINRA states that this adjustment “better reflects the key tasks performed by an Investment Company and Variable Contracts Products Principal.”
New content that may be tested on the revised exam includes the USA PATRIOT Act and associated anti-money laundering rules, the Fair and Accurate Credit Transaction Act of 2003 (FACT Act) and associated anti-identity theft rules, the Office of Foreign Assets Control (OFAC) Specially Designated National List (SDN), and Federal Deposit Insurance Corporation (FDIC) disclosures. Several new FINRA and SEC rules are on a wide range of topics may also be tested. These topics include disclosures during registration, deferred variable annuities, networking arrangements, proxies, business continuity plans, and holding customer mail, among others.
While some content that was listed on the old outline is not explicitly included on the new outline, test takers should still learn the material. For example, while the new outline does not specifically mention 529 plans or retirement plans, test takers will still be expected to know the rules regarding those products so that they may properly supervise individuals that sell such products.
This alert applies to the Series 26.