18.3.2. Becoming a Registered Employee
Under the Exchange Act, individuals who work for a broker-dealer and conduct securities business must register with FINRA. This usually involves passing one or more qualifying exams. Registration is specific to a member firm, meaning that a change of employer to another broker-dealer requires an individual to amend her registration.
FINRA recognizes two broad categories of individuals for registration: representatives and principals. A principal is a person actively engaged in the management of the member’s investment banking or securities business, including sole proprietors, officers, partners, and managers. A representative is any other person who solicits or conducts business in the investment banking or securities business, including research analysts and back office personnel. Anyone who is registered by FINRA, principal or representative, may be more generically referred to as an associated person.
FINRA requires all member firms and all firms applying for membership (other than sole proprietorships) to have at least two registered principals with respect to each aspect of the firm’s investment banking and securities business. In general, applicants for membership must also