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Exam Alert: The Series 99 Outline is Up!

FINRA recently posted the outline for the new Series 99 Operations Professionals Exam. The Madoff-inspired test is meant to ensure that Continue reading

FINRA recently posted the outline for the new Series 99 Operations Professionals Exam. The Madoff-inspired test is meant to ensure that operations professionals understand the fundamentals of the operations and regulations of a broker-dealer’s business. Click here to see the official outline.

What will be tested on the exam?

This exam will be three hours and consist of 110 questions (10 unscored) focusing on the following three topics:

Basic knowledge associated with the securities industry – basic questions about SROs, types of markets, types and characteristics of securities, broker-dealers versus investment advisers, suitability, and types of broker-dealers

Basic knowledge associated with broker-dealer operations – basic questions about types of accounts, maintenance of accounts, custody, anti-money laundering, margin, short sales, settlement, tax-reporting, and record-keeping

Professional conduct and ethical considerations – questions on FINRA conduct rules involving privacy, complaints, information barriers, written supervisory procedures, and registration

The test will be more heavily weighted toward the second category with 48 questions on broker-dealer operations. Securities industry knowledge is the second most important topic with 32 questions and the remaining 20 questions will be comprised of conduct and ethics. FINRA has yet to release the score that will be required to pass.

How difficult is the exam?

The exam outline contains 30 practice questions that represent the level of difficulty of the exam questions. Based on these sample questions the exam appears to be comparable to the Series 6 exam.

Who will have to take the exam?

Day One Professionals – Individuals who currently work as operations supervisors or operations managers or individuals who currently have the authority to materially commit capital in various back office functions. These individuals must be identified by December 16, 2011 and must register within 60 days of being identified. Those registered individuals will then have until October 17, 2012 to pass the Series 99 or a comparable exam such as the Series 6 or Series 7.

Non-Day One Professionals – Individuals who are not currently working in back-office activities, but plan to in the future. These individuals must pass the Series 99 or a comparable exam before engaging in back-office activities. They are not subject to the 12-month transition period.

Individuals who hold the following Series Exams will be exempt from taking the Operations Professionals Exam: Series 4, 6, 7, 9/10, 14, 16, 17, 23, 24, 26, 27, 28, 37, 38, 51, and 52.

Study Alert: New memory retention study finds reading hard copy is better than reading online

A University of Oregon study shows that readers of the printed New York Times “remember significantly more news stories than online news readers.” Continue reading

A University of Oregon study shows that readers of the printed New York Times “remember significantly more news stories than online news readers.” Additionally, the study shows that print readers “remember significantly more topics than online newsreaders” and that print readers remembered “more main points of news stories.”

For anyone studying for an exam and thinking about what type of study material to use, this study from Arthur D. Santana, Randall Livingstone and Yoon Cho is something to be aware of. Click on the following link below for the full article:

http://img.slate.com/media/66/MediumMatters.pdf.

FINRA Alert: New rules for social media and personal device use for business purposes

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities Continue reading

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities to comply with these rules while keeping up with explosion of social media. Last week, FINRA responded to these concerns by releasing several guidelines clarifying rules surrounding use of social media websites and personal devices for business purposes. For example, some of the guidelines included the following:

If an individual posts a statement on Twitter on behalf of the firm, that will likely constitute an interactive statement and not require prior approval by a firm’s registered principal. However, if that statement is then posted on a blog, becoming a static statement (and therefore an advertisement), prior approval is necessary.
Whether a statement is interactive or static, recordkeeping rules still apply. This means that individuals and/or firms may not use social media sites or devices that automatically delete any posts.
Individuals may respond to third-party business-related posts on their personal social media site without violating FINRA guidelines. However, responses must conform to firms’ individual policies regarding these types of posts.
As long as firms are able to keep records and supervise activity, individuals may use their own personal devices (e.g. a smart phone or a tablet) to conduct business and access business applications. Something to keep in mind when using a personal device to conduct business: firms are allowed to supervise all communications made on personal devices, including personal communications, if the device is ever used for business purposes.

These are just a sampling of issues the recent FINRA Regulatory Notice addressed. Please click here to review the full notice.

Exam Alert: FINRA expands trading pause rule to all NMS stocks

Effective August 8, 2011, FINRA has expanded its trading pause rule to encompass all NMS stocks. The new rule states that trading Continue reading

Effective August 8, 2011, FINRA has expanded its trading pause rule to encompass all NMS stocks. The new rule states that trading in an NMS stock will be paused if the price of the security shifts, in a five-minute period, by:

– 10% for securities included in the S&P 500® Index, the Russell 1000® Index and a list of selected exchange-traded products (ETPs)

– 30% for other securities priced at $1.00 or more

– 50% for other securities priced at less than $1.00.

Prior to August 8, the trading pause rule only applied to securities included in the first category (the S&P 500® Index, the Russell 1000® Index and selected ETPs).

Relevant to the Series 24, Series 7, Series 62, and Series 55 exams.

Source: FINRA Notice 11-37

Exam Alert: FINRA Charges New Fees for Canceling or Rescheduling Exams

FINRA has changed its rules regarding fees for canceling and rescheduling exams. Beginning September 1, 2011, if you cancel or reschedule an exam within Continue reading

FINRA has changed its rules regarding fees for canceling and rescheduling exams. Beginning September 1, 2011, if you cancel or reschedule an exam within 3-10 business days of the scheduled date, you will be charged one-half of the exam fee being canceled or rescheduled. If you cancel or reschedule within two days prior to the exam date, you will be charged the full exam fee.

You can check out the full notice from FINRA by clicking here.

Exam Alert: SEC replaces credit rating with other criteria on Form S-3

Form S-3 is used for “short form” registration of securities and shelf registration. The SEC has adopted rules that change the standards Continue reading

Form S-3 is used for “short form” registration of securities and shelf registration. The SEC has adopted rules that change the standards of eligibility for filing Form S-3. These rules will be effective 30 days after publication in the Federal Register. The alert applies to the Series 79, Series 62 and Series 24 exams.

One old criterion for Form S-3 registration was if the securities were rated investment grade by a nationally recognized statistical ratings organization. This criterion will be replaced with four new tests. The issuer may use Form S-3 if they satisfy any one of these four conditions and meet certain additional standards. The conditions may be found here.

Source: SEC Release 2011-155

Exam Alert: Large traders must identify themselves to the SEC

The SEC has adopted rules that require “large traders” to register with the Commission and receive unique identification numbers. The traders must then Continue reading

The SEC has adopted rules that require “large traders” to register with the Commission and receive unique identification numbers. The traders must then provide their broker-dealers with their ID numbers when they make trades, and the broker-dealers must record the ID numbers as part of their recordkeeping and transaction reporting requirements. A “large trader” is a “person whose transactions in exchange-listed securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month.” Relevant to the Series 79, 62, 55, 7, 26, and Series 24 exams.

Source: SEC Release 2011-154

Further Reading: Analysis by the Securities Technology Monitor

Exam Alert: The New Series 99 Exam for Operations Professionals

The SEC recently adopted FINRA’s proposal to create a new Operations Professional Exam to be called the Series 99 exam. This exam will affect people Continue reading

The SEC recently adopted FINRA’s proposal to create a new Operations Professional Exam to be called the Series 99 exam. This exam will affect people involved in back office functions such as recordkeeping, trade confirmation and transaction settlement. Importantly, it will not be required for those who are already licensed under the Series 6 or 7 exams. This new rule goes into effect on October 17, 2011.

Exam Alert: FINRA modifies and delays implementation of maintenance margin requirements for non-margin eligible equity securities

The changes previously mentioned in this exam alert have been pushed back from July 1, 2011, to October 3, 2011. In addition, a provision regarding Continue reading

The changes previously mentioned in this exam alert have been pushed back from July 1, 2011, to October 3, 2011. In addition, a provision regarding the day-trading of non-margin eligible equity securities has been modified. Instead of requiring that firms cancel certain customer trades, firms will need to restrict the day-trading activity of customers who fail to meet a day-trade call.

Source: FINRA Regulatory Notice 11-30

Exam Alert: SEC alters investment adviser registration and reporting requirements

The SEC has adopted changes to the registration and reporting requirements that private fund advisers face. Unless the private fund adviser meets Continue reading

The SEC has adopted changes to the registration and reporting requirements that private fund advisers face. Unless the private fund adviser meets an exemption, they must register with the SEC. Exemptions from registration are provided for venture capital fund advisers and private fund advisers with less than $150 million in assets under management in the U.S., though these advisers must still report certain business information. Foreign private advisers are exempt from the registration and reporting requirements.

Source: SEC Release 2011-133