Are FTX account holders covered by SIPC?

The answer: only SEC-registered broker-dealers offer SIPC insurance. Crypto platforms like FTX are not SEC-registered broker-dealers. Continue reading

The answer: only SEC-registered broker-dealers offer SIPC insurance. Crypto platforms like FTX are not SEC-registered broker-dealers.

SIPC stands for Securities Investor Protection Corporation. It was created in 1970 after several brokerage firms went belly up and as a result customers were wiped out.

All brokerage firms that sell stocks or bonds to the public, or that clear securities transactions are required to be members of SIPC. SIPC is a nonprofit corporation owned by its members. Member firms pay into a general insurance fund used to meet customer claims in case of bankruptcy.

If a broker-dealer goes bankrupt, SIPC provides insurance for the assets in investors brokerage accounts. SIPC may also offer insurance to customers from unauthorized trading in, or theft from, their securities accounts.

SIPC members must display an official sign showing their membership. Today that usually means “member SIPC” at the bottom of the brokerage firm’s home page, but if there is a physical office for customers then the requirement sign or plaque in a visible place.

What you need to know about SIPC if you’re taking the SIE exam

If you’re taking the FINRA Securities Industry Essentials (SIE) exam you need to know the following about SIPC:

SIPC offers up to $500,000 in coverage per customer for securities and cash, with a $250,000 limit for cash only. So if a broker-dealer firm goes bankrupt, then SIPC and the court-appointed Trustee work to return customers’ securities and cash as quickly as possible.

SIPC does not protect against all losses. For example, if the financial markets go down, and the value of customers’ assets declines, SIPC does not cover these type of losses.

If a customer has both a cash and margin account, the accounts are combined for SIPC coverage purposes.

To repeat, SIPC covers a maximum of $500,000 per “separate customer” at a broker-dealer or clearing firm—including up to $250,000 in cash. Total coverage can be higher for multiple accounts owned by the same person if the accounts are considered to be held by separate customers. There are five categories of separate customers defined by SIPC. These categories include (1) individual accounts; (2) joint accounts; (3) accounts held by executors, administrators, and guardians/custodians/conservators (such as UGMA accounts); (4) accounts held by corporations, partnerships, or unincorporated associations; and (5) trust accounts.

So if you are taking the SIE exam, and you get a question that asks if someone has $300,000 in a individual brokerage account, and $200,000 in a joint brokerage account with a spouse, and $400,000 in a trust account, all with the same broker-dealer, how much is covered by SIPC in the event the firm goes bankrupt?  Because all three accounts are considered to be held by separate customers, the correct answer is $900,000 or all of the funds. 

If your SIE exam asks how much is SIPC covered if the market falls dramatically and the value in an investor’s account drops by half, the correct answer is zero, because SIPC only covers investor losses due to broker-dealer failure, not due to market losses.

What FINRA CE Changes Are Coming in 2023?

Important changes to the Regulatory Element and Firm Element components of FINRA CE are set to go into effect on January 1, 2023. Continue reading

Solomon Exam Prep previously reported FINRA’s announcement that its continuing education (CE) rules would be undergoing significant changes. One of the changes is the creation of the Maintaining Qualification Program (MQP), which went into effect on March 15, 2022. Other important changes to the Regulatory Element and Firm Element components of FINRA CE are set to go into effect on January 1, 2023.

Regulatory Element CE Changes

Regulatory Element CE is intended to keep registered persons up to date on regulatory requirements and industry standards. Currently, registered individuals must complete Regulatory Element CE every three years. Beginning in 2023, this will become an annual requirement to be completed by December 31 of each year. Additionally, individuals will have to complete CE content that is related to each registration category they hold.

If an individual does not complete Regulatory Element CE by Dec. 31, their status will show as “CE inactive.” However, FINRA reserves the right to extend the deadline if “good cause” is shown for not completing CE.

The initial annual Regulatory Element completion date will depend on an individual’s registration status. See FINRA’s Regulatory Notice 21-41 for more details.

Firm Element CE Changes

Every FINRA member firm is responsible for providing annual Firm Element CE to its registered persons. This CE is related to the firm’s securities products, services and strategies, and policies. Starting on January 1, 2023, this annual requirement will include all registered individuals, not just “covered registered persons.” Covered registered persons are registered persons who work with customers, who are registered as research analysts, and individuals who supervise such persons.

In addition, training related to the anti-money laundering compliance program under Rule 3310(e) and annual compliance meeting under Rule 3110(a)(7) will now be able to count towards an individual’s Firm Element CE requirement.

For additional reporting on FINRA’s new CE rules and to learn what Solomon Exam Prep President & Co-founder, Jeremy Solomon, has to say on the topic, check out this ThinkAdvisor article.

For more information about FINRA CE changes, see Regulatory Notice 21-41.

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How to Pass the FINRA Series 99 Exam

Thinking about taking the Series 99 exam? Keep reading to learn what the Series 99 qualifies you to do, what the exam covers, and how you should prepare for it. Continue reading

What is the Series 99 exam?

The Series 99, also called the Operations Professionals Exam, is a FINRA (Financial Industry Regulatory Authority) exam. FINRA is an independent, self-regulatory organization that creates and enforces rules for registered broker-dealer firms and their representatives. FINRA is also responsible for administering securities licensing exams, such as the Securities Industry Essentials (SIE) exam, Series 7 exam, Series 99 exam, and many more.

The Series 99 exam measures the knowledge of entry-level registered representatives to perform their duties as Operations Professionals. The exam will help you understand your professional responsibilities, including key regulatory and control requirements. It will assess your broad understanding of the following:

    • The operations functions that support a broker-dealer’s business
    • The regulations that are designed to achieve investor protection and market integrity
    • The regulations that drive operations processes and procedures conducted at a broker-dealer
    • Regulatory red flag issues and the ability to identify and address these issues to the appropriate persons within the member firm and/or to a regulatory body, if necessary
What does the Series 99 permit me to do?

Obtaining a Series 99 qualification will permit you to perform crucial functions in a broker dealer’s operations department. Duties may include customer onboarding, financial control, stock loan/securities lending, trade confirmation, and issuing account statements.

Are there any prerequisites for the Series 99?

Yes, you must also pass the co-requisite Securities Industry Essentials (SIE) exam to obtain the Series 99 qualification. To take the Series 99 exam, you must be employed and sponsored by a FINRA-member firm.

Can I register as an Operations Professional without passing the Series 99 exam?

If you hold any of the following registrations, you can qualify as an Operations Professional without taking the Series 99 exam:

About the Exam

The Series 99 exam consists of 50 scored and five unscored multiple-choice questions. The five unscored questions are experimental questions and appear randomly.

Series 99 exam details in a table

Note: Scores are rounded down to the next lowest whole number (e.g. 67.9% would be a final score of 67%–not a passing score for the Series 99 exam).

Topics Covered on the Exam

FINRA divides the questions on the Series 99 exam into two parts representing the two major job functions of an Operations Professional.

FINRA updates its exam questions regularly to reflect the most current rules and regulations. Solomon recommends that you print out the current version of the FINRA Series 99 Content Outline and use it in conjunction with the Solomon Series 99 Study Guide. The Content Outline is subject to change without notice, so make sure you have the most recent version.

Series 99 Example Questions

The Series 99 exam consists of multiple-choice questions, each with four options. You may see the following question structures. However, keep in mind that these sample questions don’t necessarily represent the difficulty level or subjects covered in the exam.

Closed Stem Format:

This item type asks a question and gives four possible answers to choose from.

Which of the following is not a factor that can be used to determine whether securities were not delivered in good form and are therefore subject to possible rejection?

    1. Improper endorsements
    2. Late arrival
    3. Erroneously cancelled coupons
    4. Damaged or mutilated certificates
Open Stem Format:

This kind of question has an incomplete sentence followed by four possible conclusions.

Shoestring Discount Stock Jocks owns no shares of stock in any exchange-traded companies. In its efforts to execute a buy order for your account, it would be acting as a:

    1. Broker-dealer
    2. Dealer
    3. Broker
    4. None of the choices listed
“Except” (or “Not”) Format:

This type requires an answer that is incorrect or is an exception among the four answer choices.

All of the following are definitely DTC-eligible securities, except:

    1. A stock that trades on the NYSE
    2. A stock that trades on Nasdaq
    3. An OTC security
    4. A bond that trades on the NSYE
  1.  
  1. Answers: 1. B   2. C   3. C  

Try a free sample of Solomon Exam Prep’s Series 99 Exam Simulator. You’ll receive instant feedback on each question with a robust explanation of the correct answer.

Taking the Series 99 Exam

FINRA administers the Series 99 exam, and you must take it at a Prometric test center. The exam is given via computer. Before the exam starts, you’ll take a tutorial on how to take the exam. After you finish the tutorial, the exam will begin and you’ll have one hour and 30 minutes to complete it.

Like all qualifying exams in the securities industry, the Series 99 is closed-book, and you’re not allowed to bring anything into the exam. The test center will provide you with any materials you need to complete the exam. For instance, the test center may provide a whiteboard with markers or scratch paper and a pencil, as well as a basic electronic calculator. Or, a digital calculator and notepad will be available within the computer testing platform.

The inspection and sign-in requirements at test centers are stringent, so plan to arrive at least 30 minutes before your scheduled test appointment.

Test-Taking Tips

When taking the exam, it helps to keep some test-taking strategies in mind. Try not to spend too long on one question—this may cause you to run out of time and not get to other questions you know. If you don’t know the answer to a question, guess at the answer and mark it for review . There’s no penalty for guessing, so it’s beneficial to answer every question.

After you’ve finished all the questions, you can return to any flagged questions. This strategy allows you to efficiently answer the ones you know. You might also learn something later in the exam that helps you answer an earlier question. Just remember to save enough time to return to the questions you didn’t answer. However, it’s not a good idea to simply skip all of the difficult questions with the plan to answer them later. You should make a serious effort to answer each question before moving on to the next one since your thoughts are often clearer earlier on during the exam.

How to Study for the Series 99 Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon Study Guide, carefully. Many students read the Study Guide two or three times before taking the exam. 
    • Take chapter quizzes in the Exam Simulator. When you finish reading a chapter in the Study Guide, take 4–6 chapter quizzes in the Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales.
    • Take full practice exams in the Exam Simulator. When you’ve finished reading the entire Study Guide, review your handwritten notes once more. Finally, start taking full practice exams in the Exam Simulator. Aim to pass at least six full practice exams and try to get your average score to at least 80%. When you reach that point, you’re probably ready to sit for the Series 99 exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the Study Guide, take handwritten notes and review your notes every day for 10–15 minutes. Studies show that taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another proven method to reinforce memory and strengthen learning.
    • Research. Research anything you don’t understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they don’t understand get a deeper understanding of the subject matter and are much more likely to pass. 
    • Become the teacher. Studies show that explaining what you’re learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions, or explain it out loud to yourself. Studies show this helps almost as much as explaining to an actual person (see Solomon’s blog post to learn more about this strategy!). 
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Series 99 Resources folder in your Solomon student account has helpful study tools, including documents that summarize important exam concepts. There’s also a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Watch the Video Lecture. This provides a helpful review of the key concepts in each chapter after reading the Solomon Study Guide. Take notes to help yourself stay focused.
    • Use Ask the Professor. If you have a content-related question, click the Ask the Professor button in your account dashboard and get personalized help from a Solomon professor.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you’re studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep. Sleep consolidates learning into memory, studies show. Be good to yourself while you’re studying for the Series 99: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the FINRA Series 99 exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming an Operations Professional.

Explore all Solomon Series 99 exam prep, including the Study Guide, Exam Simulator, and Video Lecture.

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Pass Probability™ Now Available for the Series 24

If you’re studying for the FINRA Series 24 exam, take the guesswork out of knowing when you’re ready to take your exam with Solomon’s Pass Probability feature. Continue reading

Preparing for a challenging securities licensing exam like the FINRA Series 24, also known as the General Principal Qualification Exam, can be a stressful experience. In particular, determining when you’ve studied enough and are ready to sit for your exam isn’t always easy. How do you know if those weeks of preparation have paid off?  

Pass Probability

With the Solomon Exam Prep Pass Probability™ feature, now available in the Solomon Series 24 Exam Simulator, you don’t have to guess whether you’re truly prepared to sit for the Series 24 exam. Pass Probability™ is Solomon Exam Prep’s innovative AI technology that measures your readiness to pass a securities exam. Pass Probability is based on a mathematical model involving the performance of thousands of Solomon students. A correlation analysis has shown that Pass Probability is highly effective at predicting a student’s likelihood of passing.

Here’s how it works: Once you take five full practice exams in the Solomon Series 24 Exam Simulator, the Pass Probability™ tool is activated. Based on your scores on these five practice exams, the tool calculates the probability that you will pass the real test, with a percentage out of 100. Solomon recommends aiming for a Pass Probability of 75% (80% is even better) before taking your exam.

Remediation Reports  

But if your Pass Probability is below 75%, Solomon can help! Connected to the Pass Probability tool, the Solomon Remediation Report provides an additional level of customized study support. If your Pass Probability is lower than 75%, you will receive an individual report with detailed suggestions on how to focus your study efforts BEFORE taking your exam. The Remediation Report is sent straight to your email and includes the following: 

    • Summary of current study progress
    • Personalized recommendations on areas for growth
    • Study tips for the homestretch
    • Reminders about student support elements

Solomon Pass Probability and Remediation Reports are also available for these exams: SIE, Series 6, Series 7, Series 63, Series 65, Series 66, Series 79, and Series 82.

Used Solomon materials for both the SIE and S7. So grateful to these materials for helping me achieve a passing score on my first attempts of both exams. The study guide and videos were thorough, comprehensive and easy to follow. I found the pie charts extremely useful in helping me identify areas where I needed more study, and was grateful for the Pass Probability feature in giving me a bit of extra confidence before sitting for the exam. I would absolutely recommend all of their materials to anyone taking this journey.

Andrew Nerys, Square Inc., Portland, OR

If you have a current subscription to the Solomon Series 24 Exam Simulator, Pass Probability and Remediation Reporting have been added to your product free of charge. These tools are in addition to the other helpful Exam Simulator features:

    • Huge Question Database: Over 3,500 original Series 24 practice questions with robust rationales that clearly explain why a specific answer is correct
    • Free Updates: Questions updated continually to keep up with regulatory and industry changes
    • Strength Breakdowns: Refine your practice with detailed exam results and self-assessment tools that help you identify areas that require more study
    • Interactive Review: Makes it easy to review the questions you’ve gotten wrong on quizzes and exams
    • Unlimited Quizzes & Exams: 
      ◦ 20-question quizzes based on the FINRA exam sections 
      ◦ 160-question untimed practice exams with immediate answer feedback 
      ◦ 160-question timed practice exams

New to Solomon Exam Prep? Learn more about the Solomon Series 24 Exam Simulator and other study materials available for the Series 24 by visiting the Solomon website here. And click here or the button below to try a free Series 24 sample quiz from the Solomon Exam Simulator!

Big Changes to FINRA CE Requirements

FINRA announced several important changes to its CE rules affecting registered representatives and principals. Learn how these changes may affect you. Continue reading

On November 17th, FINRA announced the adoption of important amendments to its continuing education (CE) rules. These changes will affect individuals with representative or principal registrations, such as the Series 7, Series 24, Series 79, and Series 82. Some of the changes go into effect as soon as March 15, 2022, while others become effective on January 1, 2023.

FINRA’s current CE program consists of a Regulatory Element and a Firm Element. The Regulatory Element focuses on regulatory requirements and industry standards and must be taken every three years by registered individuals. The Firm Element is provided by each firm to its registered persons yearly, and covers the firm’s securities products, services and strategies, policies, and industry trends. Currently, the FINRA CE program does not allow individuals to maintain terminated qualifications by completing CE. Instead, individuals must requalify by examination if they have not reregistered within the two-year qualification period.

The upcoming changes to FINRA CE are outlined in Regulatory Notice 21-41, which states that the changes to Rules 1210 and 1240 will: “(1) provide eligible individuals who terminate any of their representative or principal registration categories the option of maintaining their qualification for any terminated registration categories by completing annual CE through a new program, the Maintaining Qualifications Program (MQP); (2) require registered persons to complete CE Regulatory Element annually for each representative or principal registration category that they hold; and (3) expressly allow firms to consider other required training toward satisfying an individual’s annual CE Firm Element and extend the Firm Element requirement to all registered persons.”

Changes to Regulatory Element

There will be several changes to the FINRA CE Regulatory Element, effective January 1, 2023. Instead of every three years, registered individuals will have to complete CE every year by December 31st. In addition, individuals must complete CE content for each registration category they hold. Another change is that failure to complete the Regulatory Element by Dec. 31 will result in a CE inactive status. However, if “good cause” is shown, FINRA reserves the right to extend the deadline.

The initial annual Regulatory Element completion date will depend on an individual’s registration status: 

The initial completion date will be Dec 31, 2023 if…

    • An individual’s registration status stays the same after Jan 1, 2023, and the individual has completed Regulatory Element in 2021 under the current requirements.
    • An individual reregisters in 2023 for a registration category without having done one of the following: completed Regulatory Element for that registration category in 2023, passed an exam for that registration category, or obtained an unconditional exam waiver for that registration category.

On the other hand, the initial completion date will be Dec 31, 2024 if…

    • An individual reregisters in 2023 for a registration category after having done one of the following: completed Regulatory Element for that registration category in 2023, passed an exam for that registration category, or obtained an unconditional exam waiver for that registration category.
    • An individual registers in 2023 for the first time for a registration category after having passed an exam for that registration category or obtained an unconditional exam waiver for that registration category.

Changes to Firm Element

Also, effective January 1, 2023, the annual Firm Element CE requirement is being extended to include all registered individuals, not just “covered registered persons.” Covered registered persons include registered persons who work with customers, who are registered as research analysts, and individuals who supervise such persons. Starting in 2023, all registered persons will be required to complete the annual Firm Element CE.

Another rule amendment includes allowing training related to the anti-money laundering compliance program under Rule 3310(e) and annual compliance meeting under Rule 3110(a)(7) to go towards satisfying an individual’s Firm Element CE requirement.

New MQP Program

FINRA says that to better accommodate registered persons, “particularly women and underrepresented minorities, whose personal circumstances take them away from the industry for a time,” the regulator is creating the new Maintaining Qualifications Program (MQP). Eligible individuals will be able to complete annual CE through the MQP to maintain their qualification for any terminated registration categories. This program will go into effect March 15, 2022, with MQP content available by July 1, 2022. See Regulatory Notice 21-41 for details on eligibility and participation conditions.

Currently, registered persons must retake their qualification licensing exams after two years of losing their representative or principal registration. MQP participants will have a maximum of five years following the termination of a representative or principal registration category to reregister without having to retake their licensing exam or having to obtain an exam waiver.

Starting November 17, 2021, FINRA will begin notifying individuals who were registered as a representative or principal between March 15, 2020, and March 15, 2022, and those participating in the Financial Services Affiliate Waiver Program (FSAWP) prior to March 15, 2022, of their potential eligibility to participate in the MQP. These individuals can start notifying FINRA on January 31, 2022, that they intend to participate in the MQP. This is done through their FinPro accounts. Individuals will have until March 15, 2022, to notify FINRA of their intention. If an individual’s registration category has been terminated but the firm has not submitted a Form U5 to FINRA, the individual may let FINRA know about their intent to participate in the MQP by sending an email to mqpnotice@finra.org by March 15, 2022, at the latest.  

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Interview: How Alec Orudjev Passed Four Securities Licensing Exams

What does it take to pass securities licensing exams like the SIE, Series 24, Series 63, and Series 79? Read about one student’s approach to success. Continue reading

No one said career changes are easy, and when they involve taking several difficult securities licensing exams, the challenge is real. Having an effective study system is an important part of passing securities licensing exams, and hearing about others’ strategies can help you develop a system that works for you. Solomon Exam Prep recently interviewed Alec Orudjev, General Counsel at FT Global Capital, about passing the SIE, Series 24, Series 63, and Series 79 exams (in three months!). Alec shares valuable insights into his study process and how he utilizes Solomon materials to achieve success.

“… the Solomon study materials are the best and the most comprehensive (notes, resources, simulated exam questions, etc.) in their class, in my view.

Photo of Alec Orudjev

Alec Orudjev

Solomon Exam Prep: What motivated you to pursue multiple securities licenses?

Alec Orudjev: After about two decades of being an attorney in private practice, I decided to change my career path and accepted an in-house legal counsel position earlier in the year. As a condition of such change, I needed to secure certain FINRA licenses.

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Alec Orudjev: I have passed the SIE, Series 79, 63 and 24 tests, and am currently studying for the Series 7 exam. While some of this sequence is dictated by FINRA rules, etc., a great deal of it is a matter of personal planning. Given the overlapping nature of the substance of these tests, I thought it would be helpful to plan the sequence to benefit from common points/concepts across different tested areas. Basically, I focused on the end objective and reviewed the substance of each test to line them up so as to utilize my time most efficiently and effectively.

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Alec Orudjev: Looking back, I think the Series 24 exam commanded most of my study time and attention. I think the volume of what was to be covered and the overall fatigue of having to study and pass three FINRA exams in a 2 ½ month period both made this test preparation more difficult than it would or should have been. It is a very saturated, broad themed exam that requires a lot of focus and attention.

Solomon Exam Prep: How did you approach studying for your exams?  

Alec Orudjev: My approach included: (i) outlining, and (ii) attending Solomon live classes and utilizing exam simulators. With respect to the first element, I approached all my exam preparations the way I did my law school exams – by first preparing thorough outlines of the reading materials. I would start by reading the Solomon preparation materials, actively engaging them and highlighting key points, concepts and examples. Next, I would transfer (literally and figuratively) those notes into an outline of my own, condensing the reading materials down to their bare essence. For example, five chapters of the Series 24 prep book (about 500 pages) were condensed to a 50-page outline (10:1 ratio or so) which, then, I used in reviewing in preparation for the test. Needless to say, one’s outline is as good as one’s effort and the quality of the underlying study materials. On the latter point – the Solomon study materials are the best and the most comprehensive (notes, resources, simulated exam questions, etc.) in their class, in my view. While this outlining approach seems like a lot of work, it is. However, it has worked for me for years and I do strongly recommend this approach to all.

With respect to the second element of my approach, I made every effort to attend live classes and utilize exam simulator questions. I will then turn to Solomon’s online exam question bank and answer those questions, noting what I got right and, more importantly, what and why I got wrong. Also, a significant part of my preparations involved participation in live classes offered by Solomon (I enrolled in the SIE and 63 sessions). You tend to get lot more out of these sessions if you review the materials ahead of time. Overall, they are terrific – the instructor is sharp and very knowledgeable, with a healthy sense of humor to get you through some rather dense and tedious parts of the material. I would highly recommend taking live sessions as they force you to focus on the totality of the study materials in five days, 3-4 hours a day – a daunting, but useful exercise.

Studying for any difficult test is no pleasant experience … take breaks, change the nature of your mental engagement (read something else altogether, watch, take a walk, etc.) to refresh and resume your studying effort.”

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Alec Orudjev: I took all exams (4 + 1 more to go) at the ProMetric testing center in Bethesda, MD. Given the stress of test-taking, in general, I did not want to add the stress of doing it remotely, etc. The conditions at the center were superb, the staff – very friendly and helpful. I offer no new advice on how to handle this experience other than what is commonly suggested for test takers, e.g., arrive early, read test center instructions carefully and follow them to the letter, give yourself enough time to travel, relax and focus before the test, pace yourself during the test, etc. Keep in mind, however, that FINRA tests are uniquely stringent in the way they are administered, etc. So, to reiterate – read the test taking instructions closely.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Alec Orudjev: Focus on the reasons why you have undertaken this effort. Studying for any difficult test is no pleasant experience, and very few things can make that less so. However, take breaks, change the nature of your mental engagement (read something else altogether, watch, take a walk, etc.) to refresh and resume your studying effort. There will be many distractions and excuses – acknowledge and indulge to some extent, but do not lose your focus. Most importantly, be honest with yourself about how disciplined you are studying and preparing for your exams.

Solomon Exam Prep: How has passing the SIE, Series 24, Series 63, and Series 79 exams affected your work and your career?

Alec Orudjev: Certainly. Apart from the obvious, studying helped me to be a better legal professional and advisor. Understanding and internalizing a large, complex body of laws, rules and regulations governing the conduct of member firms is a daunting task indeed. These exams set a useful baseline for developing this understanding and building upon it. Take solace in this idea and keep at it.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 7, Series 24Series 63, and Series 79.

How to Pass the NASAA Series 66 Exam

What can you do with a Series 66 license? What does the exam cover and how should you prepare for it? Keep reading for answers to your Series 66 questions. Continue reading

What does the Series 66 exam allow me to do?

The Series 66, also known as the Uniform Combined State Law Exam, is created by the North American Securities Administrators Association (NASAA), which represents state securities regulators in the United States, Canada, and Mexico. Passing the Series 66 exam is like passing both the Series 63 (Uniform Securities Agent State Law Examination) and the Series 65 (Uniform Investment Adviser Law Examination). However, to register as an investment adviser representative with the Series 66, you must also pass the FINRA Series 7 General Securities Representative exam. In conjunction with the Series 7 license, the Series 66 license qualifies you as both an investment advisor representative and a securities agent.

As an investment adviser representative, an individual can perform the following tasks:  

    • Make recommendations and render general advice regarding securities
    • Manage accounts or portfolios of clients
    • Solicit, offer, or negotiate for the sale of investment advisory services
    • Supervise employees who perform any of the above tasks.

Note that the Series 7 exam is a co-requisite to the Series 66, so you can take the exams in either order. However, Solomon recommends passing the Series 7 before the Series 66 since much of the information tested on the Series 7 is likely to appear on the Series 66 exam.

About the Exam

The Series 66 exam consists of 100 scored and 10 unscored multiple-choice questions covering the four sections of the NASAA Series 66 exam outline. The 10 additional unscored questions are ones that the exam committee is trying out. These are unidentified and are distributed randomly throughout the exam. The NASAA updates its exam questions regularly to reflect the most current rules and regulations.

About the Series 66 exam

Note: Scores are rounded down to the next lowest whole number (e.g. 72.9% would be a final score of 72% – not a passing score for the Series 66 exam).

Topics Covered on the Exam

The NASAA divides the Series 66 exam into four sections:

Topics on the Series 66 exam

The Series 66 exam covers many topics including the following:

    • Business Cycles and Economic Factors
    • Fundamental Analysis
    • Types of Risk
    • Equity and Debt Securities
    • Investment Companies
    • Discounted Cash Flow
    • Derivatives
    • Alternatives and Insurance Products
    • Clients and Client Profiles
    • Capital Market Theory, Portfolio Management, and Taxation
    • Taxation of Debt and Equity Securities
    • Retirement Plans, ERISA, Special Accounts
    • Trading and Performance Measures
    • Regulations of Securities Professionals
    • Regulations of Securities and Issuers
    • Remedies and Administrative Provisions
    • Recordkeeping Requirements
    • Net Worth/Net Capital Requirements
    • Business Practices for IAs and IARs
    • Performance-based fees
    • Wrap fees
    • Custody
    • Communication with Clients and Prospects
    • Compensation and Client Funds
    • Conflicts of Interest

Question Types on the Exam

The Series 66 exam consists of multiple-choice questions, each with four options. You will see these question structures:

Closed Stem Format:

This item type asks a question and gives four possible answers from which to choose.

Which of the following is not a current asset?

    1. Inventory
    2. Accounts receivable
    3. Cash
    4. Trademarks
Incomplete Sentence Format:

This kind of question has an incomplete sentence followed by four options that present possible conclusions.

Callable preferred stock is more likely to be called when:

    1. Interest rates go up.
    2. Interest rates go down.
    3. The price of the common stock rises.
    4. The price of the common stock falls.
“EXCEPT” Format:

This type requires you to recognize the one choice that is an exception among the four answer choices presented.

An investor calculating the investing merits of a payment or payments not yet received might potentially use all of the following except:

    1. Present value
    2. Net present value
    3. Future value
    4. Internal rate of return
Complex Multiple-Choice (“Roman Numeral”) Format:

For this question type, you see a question followed by two or more statements identified by Roman numerals. The four answer choices represent combinations of these statements. You must select the combination that best answers the question.

Pick two statements that best represent time-weighted and dollar-weighted returns:

    1. Conceptually, the time-weighted return is the compounded growth rate of the initial investment over a given period of time, and is calculated using the geometric mean rather than the arithmetic mean.
    2. Conceptually, the dollar-weighted return is the compounded growth rate of the initial investment over a given period of time and is calculated using the geometric mean rather than the arithmetic mean.
    3. Conceptually, a time-weighted return is the internal rate of return on an investment.
    4. Conceptually, a dollar-weighted return is the internal rate of return on an investment.
    1. I and III
    2. I and IV
    3. II and III
    4. II and IV

This format is also used in items that ask you to rank or order a set of items from highest to lowest (or vice versa), or to place a series of events in the proper sequence.

Rank the following categories of mutual funds in order of volatility, from highest to lowest.

    1. Growth and income
    2. Balanced
    3. Growth
    4. Equity income
    1. I, III, II, IV
    2. III, II, I, IV
    3. III, I, II, IV
    4. III, I, IV, II

Answers: D, B, C, B, D

For an even better idea of the possible question types you might encounter on the Series 66 exam, try Solomon Exam Prep’s free Series 66 Sample Quiz.

How to Study for the Series 66 Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon Study Guide, carefully. The Series 66 is a knowledge test, not an IQ test. Many students read the Study Guide two or three times before taking the exam. To increase your ability to focus while reading, or as an alternative to reading, listen to the Solomon Series 66 Audiobook, which is a word-for-word reading of the Study Guide.
    • Answer practice questions in the Solomon Exam Simulator. When you’re done with a chapter in the Study Guide, take 4–6 chapter quizzes in the Solomon Series 66 Online Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales. When you’re finished reading the entire Study Guide, review your handwritten notes once more. Then, and only then, start taking full practice exams in the Exam Simulator. Aim to pass at least six full practice exams and try to get your Solomon Pass Probability™ score to at least an 80%; when you reach that point, you are probably ready to sit for the Series 66 exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the Study Guide, take handwritten notes and review your notes every day for 10 to 15 minutes. Studies show that the act of taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another powerful and proven method to reinforce memory and strengthen learning. Solomon also offers digital flashcards for the Series 66 exam.
    • Research. Research anything you do not understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they do not understand get a deeper understanding of the subject matter and are much more likely to pass.
    • Become the teacher. Studies show that explaining what you are learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions. If you don’t have anyone, explain it to yourself. Studies show that helps almost as much as explaining to an actual person (see Solomon’s previous blog post to learn more about this strategy!).
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Resources folder in your Solomon student account has helpful information, including a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Watch the Video Lecture. This provides a helpful review of the key concepts in each chapter after reading the Solomon Study Guide. Take notes to help yourself stay focused.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you are studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep during the period when you are studying. Sleep consolidates learning into memory, studies show. Be good to yourself while you are studying for the Series 66: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the NASAA Series 66 Exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming a registered securities agent and investment advisor representative.

To explore all Solomon Exam Prep’s Series 66 study materials, including product samples, visit the Solomon website here.

For more helpful securities exam-related content, study tips, and industry updates, join the Solomon email list. Just click the button below:

Interview: How Andrew Nerys Passed Three Securities Licensing Exams

If you’re preparing to take a securities licensing exam, such as the SIE, Series 7, or Series 63 (or all three!), Solomon’s latest student interview is a must-read. Continue reading

If you’re interested in becoming a securities industry professional, there are many paths to follow, most of which require you to pass one or more securities licensing exams. Depending on your work and the type of employer, a common exam track is the SIE, Series 7, and Series 63 exams.

The SIE exam covers fundamentals of the securities industry and is a co-requisite to several qualification exams, including the Series 7. The Series 7 qualifies you to buy and sell the widest range of securities. The Series 63 covers the principles of state securities regulation.

Passing all three exams requires considerable effort – but it is possible! Solomon Exam Prep recently interviewed Andrew Nerys, Brokerage Operations Specialist at Cash App Investing, about passing the SIE, Series 7, and Series 63. Read about how Andrew approached studying for these exams, his experience taking exams both remotely and in-person, and how passing these securities licensing exams has benefited his career.

“Passing these exams allowed me to make an exciting transition to a new team and gave me a sense of direction for my professional future.”

Andrew Nerys

Andrew Nerys

Solomon Exam Prep: What motivated you to pursue multiple securities licenses?

Andrew Nerys: To be considered for a permanent role with my organization, it was required for me to pass the three exams I took.

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Andrew Nerys: I took the SIE, followed by the Series 7 and, lastly, the Series 63. I ultimately didn’t get much say in the order or scheduling of my exams but I did find it helpful all the same. I found that preparing for the SIE (and taking the exam) was a good introduction to the concepts and regulations of the securities industry. The Series 7 built on the concepts that were introduced in the SIE and gave me a good foundation. Taking the Series 63 last was refreshing, in a way, since I found it easier to absorb the material and there was much less to cover in preparation for the exam. I don’t think I’d change anything if I had to do it all again which, hopefully, won’t ever be the case!

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Andrew Nerys: The Series 7 definitely required the most study time. There’s a lot of material to cover and some of the concepts were challenging for me to understand. As a result, I found the need to re-read several sections and to take more of the practice tests at the end of each chapter. I also started studying each chapter by watching its corresponding Video Lecture, so it sometimes took several hours to get through one chapter’s worth of material. In total, I estimate that I spent just under 100 hours studying for that one exam.

Solomon Exam Prep: How did you approach studying for your exams?

Andrew Nerys: For each of the exams, I started by watching the chapter’s Video Lecture and taking very brief notes. Once finished with the video, I’d move on to reading the Study Guide and taking more comprehensive notes to fill in the gaps. I used a couple of wire-bound notebooks and tried to space everything out so I’d have an easy time finding any info I might be hunting for when I went back to review my notes.

I also tried to stick to the study schedules provided by Solomon as much as I could, but didn’t beat myself up if I fell a day behind. I found that I’d usually make up for it soon enough. I only made flashcards for concepts that I really struggled with, or specific equations that required memorization. Otherwise, I leaned heavily on practice tests – both for each chapter and the ones provided for exam review. The pie charts and Pass Probability™ metrics were very useful in helping me identify areas where I needed more study.

It’s always worth remembering that passing these exams is achievable, especially on those days where it feels impossible.”

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Andrew Nerys: I had a blended experience with taking the actual exams: I took the SIE and 63 at a testing center and took the Series 7 remotely. I didn’t really have a preference for one over the other, but I’d strongly encourage anyone taking it remotely to make the space as distraction-free and free of clutter as possible. Not only did I find that helpful in keeping me focused, but it also made me feel more confident that my exam result wouldn’t be nullified for failing to meet the remote testing requirements.

The other thing to consider when deciding whether or not to take an exam remotely is that you’re not allowed to have any paper, pen, or calculator on your desk when testing remotely. That means all of the notes and calculations have to be done using your computer, which might be a disadvantage when compared to taking the exam at a testing center.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Andrew Nerys: Establish a study routine early in the process that’s easy to stick to and that keeps you regularly engaged in the material. If I took more than one day off between studying, I found it more difficult to get back into study mode.

It’s always worth remembering that passing these exams is achievable, especially on those days where it feels impossible. I also use Reddit and subscribed to a couple of Subreddits that focus on the Series 7 and other related exams. I found it really helpful to have a community that was going through the experience (or had recently been through it) to help keep me motivated and to encourage my success.

Solomon Exam Prep: How has passing the SIE, Series 7, and Series 63 exams affected your work and your career?

Andrew Nerys: Passing these exams allowed me to make an exciting transition to a new team and gave me a sense of direction for my professional future. In a more indirect way, it also helped reinforce the feeling that I’m capable of achieving my goals when I have the right resources and mindset.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 7, and Series 63.

How to Pass the FINRA Securities Industry Essentials (SIE) Exam

Thinking about taking the SIE exam? Keep reading to learn what the SIE is, what topics the exam covers, and how you should prepare for it. Continue reading

Updated June 9, 2022

Should I Take the SIE Exam?

Are you interested in the world of stocks, bonds, and investments? Thinking about a career as a financial advisor? Or perhaps your goal is to become an investment banker or a hedge fund manager? There are many attractive career options in the securities industry, but no matter which path you’re considering, you’ll probably need to take the Securities Industry Essentials (SIE) Exam.

If you’re not sure whether a career as a securities industry professional is right for you, the SIE is a great way to test the waters. For college students, the SIE provides a broad overview of the securities industry and financial knowledge that will be helpful even if you don’t pursue a securities industry career. And passing the SIE will make you more competitive when looking for a financial or investment-related internship.

For job seekers in general, having the SIE under your belt shows potential employers that you are serious about a career in the industry and have mastered industry fundamentals. And because the SIE is a co-requisite to several securities industry qualification exams, passing it allows you to jumpstart your career goals.

What is the SIE Exam?

The SIE exam is an introductory-level exam that covers fundamental securities industry knowledge. The SIE focuses on industry terminology, securities products, the structure and function of the markets, regulatory agencies and their functions, and regulated and prohibited practices.

The SIE is a co-requisite of several qualification exams, including the Series 6, Series 7, Series 22, Series 79, Series 82, and Series 99. Passing the SIE does not qualify you to become a registered securities industry professional, but it is usually the first step. Because the SIE is “co-requisite,” instead of “pre-requisite,” you don’t have to take the SIE before taking other FINRA exams. However, taking the SIE first is highly recommended because what you learn on the SIE is extremely helpful to you when you take any other security exam. The knowledge that you learn on the SIE is wind in your sails when you take any other registered representative level securities qualification exam, such as the Series 6 or Series 7.

Any individual 18 or older may take the SIE exam. Unlike other FINRA securities exams, employment and sponsorship by a FINRA member firm is not required in order to take the SIE, and exam results are valid for four years. Individuals can sign up to take the SIE exam on the FINRA website by creating an account, paying the $80 exam fee, and scheduling the exam. The SIE can be taken at a Prometric test center or online via the ProProctor platform.

About the Exam

The SIE exam consists of 75 scored and 10 unscored multiple-choice questions covering the four sections of the FINRA SIE exam outline. The 10 additional unscored questions are ones that the exam committee is trying out. These are unidentified and are distributed randomly throughout the exam. FINRA updates its exam questions regularly to reflect the most current rules and regulations.

About the SIE exam

Note: Scores are rounded down to the next lowest whole number (e.g. 69.9% would be a final score of 69% – not a passing score for the SIE exam).

Topics Covered on the Exam

FINRA divides the SIE exam into four sections:

SIE exam topics

The SIE exam covers many topics including the following:

    • Common Stock
    • Preferred Stock, Warrants, Rights and ADRs
    • Bonds and Yields
    • Types of Bonds
    • Treasury Securities, ABS, CMOs, and Munis
    • Mutual Funds and Other Investment Companies
    • Life Insurance Products and Municipal Fund Securities
    • Options, Partnerships, Hedge Funds, and Private Placements
    • Risks
    • Customer Disclosures & Taxation
    • Underwriting, Issuing, and Registering Securities
    • Exemptions from Registration & Types of Broker-Dealers
    • Markets, Financial Institutions, and Clearance & Settlement
    • Economic Factors and Business Cycles
    • Tools of Government Policy and International Factors
    • Opening an Account & Types of Accounts
    • Cash and Margin Accounts
    • Order Processing
    • Handling Corporate Actions, Account Compliance, and SIPC Rules
    • Prohibited Activities and Trading Rules
    • FINRA Conduct Rules
    • FINRA Membership

Question Types on the SIE Exam

The SIE exam consists of multiple-choice questions, each with four options. You will see these question structures:

Closed Stem Format:

This item type asks a question and gives four possible answers from which to choose.

When interest rates go up, what happens to the price of typical preferred stock?

    1. It rises.
    2. It falls.
    3. It stays the same.
    4. It is unrelated to interest rates, so it is impossible to tell.
Incomplete Sentence Format:

This kind of question has an incomplete sentence followed by four options that present possible conclusions.

ADRs trade in:

    1. The foreign currency that underlies the ADR
    2. U.S. dollars
    3. A combination of foreign currency and U.S. dollars
    4. A special exchange rate that takes into consideration how much foreign currency can purchase one U.S. dollar
“EXCEPT” Format:

This type requires you to recognize the one choice that is an exception among the four answer choices presented.

All of the following are advantages to the issuer of debt financing over equity financing except:

    1. No ownership dilution
    2. No loss of control
    3. Interest payments are a deductible business expense
    4. Fixed repayment schedule
Complex Multiple-Choice (“Roman Numeral”) Format:

For this question type, you see a question followed by two or more statements identified by Roman numerals. The four answer choices represent combinations of these statements. You must select the combination that best answers the question.

The prices of which of the following two types of preferred stock are least sensitive to changes in interest rates?

    1. Participating preferred
    2. Cumulative preferred
    3. Adjustable-rate preferred
    4. Convertible preferred
    1. I and II
    2. II and III
    3. I and IV
    4. III and IV

This format is also used in items that ask you to rank or order a set of items from highest to lowest (or vice versa), or to place a series of events in the proper sequence.

Rank the following yields for a premium bond held to maturity from highest to lowest.

    1. Yield to call
    2. Coupon rate
    3. Yield to maturity
    4. Current yield
    1. II, IV, III, I
    2. IV, I, III, II
    3. II, IV, I, III
    4. III, I, IV, II

For an even better idea of the possible question types you might encounter on the SIE exam, try Solomon Exam Prep’s free SIE Sample Quiz and SIE Sample Exam.

How to Study for the SIE Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon SIE Study Guide, carefully. The SIE is a knowledge test, not an IQ test. Many students read the Study Guide two or three times before taking the exam. To increase your ability to focus while reading, or as an alternative to reading, listen to the Solomon SIE Audiobook, which is a word-for-word reading of the Study Guide.
    • Answer practice questions in the Solomon Exam Simulator. When you’re done with a chapter in the Study Guide, take 4–6 chapter quizzes in the Solomon Online Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales. When you’re finished reading the entire Study Guide, review your handwritten notes once more. Then, and only then, start taking full practice exams in the SIE Exam Simulator. Aim to pass at least six full practice exams and try to get your Solomon Pass Probability™ score to at least an 80%; when you reach that point, you are probably ready to sit for the SIE exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the SIE Study Guide, take handwritten notes and review your notes every day for 10 to 15 minutes. Studies show that the act of taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another powerful and proven method to reinforce memory and strengthen learning. Solomon also offers digital flashcards for the SIE exam.
    • Research. Research anything you do not understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they do not understand get a deeper understanding of the subject matter and are much more likely to pass.
    • Become the teacher. Studies show that explaining what you are learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions. If you don’t have anyone, explain it to yourself. Studies show that helps almost as much as explaining to an actual person (see Solomon’s previous blog post to learn more about this strategy!).
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Resources folder in your Solomon student account has helpful information, including a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Watch the Video Lecture. This provides a helpful review of the key concepts in each chapter after reading the Solomon SIE Study Guide. Take notes to help yourself stay focused.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you are studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep during the period when you are studying. Sleep consolidates learning into memory, studies show. Be good to yourself while you are studying for the SIE: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the FINRA SIE Exam! It just takes focus and determination. Earning this certification will provide valuable knowledge and open up rewarding career opportunities. Solomon Exam Prep is here to support you on your first step to entering the securities industry.

To explore all Solomon Exam Prep’s SIE study materials, including product samples, visit the Solomon website here.

For more helpful securities exam-related content, study tips, and industry updates, join the Solomon email list. Just click the button below:

Update: Series 54 Deadline Extended to November 30

Principals at municipal advisor firms must pass the Series 54 exam by November 30, 2021, to continue acting as principals. Continue reading

As we covered in a previous blog post on the Solomon Industry News Blog, the Municipal Securities Rulemaking Board (MSRB) had announced plans to push back the deadline for municipal advisor principals to take the new Series 54 exam. However, the MSRB did not say how much of an extension they intended to give.

Now we know. On September 2, the MSRB filed a request with the SEC to extend the Series 54 deadline from November 12 to November 30.

The SEC must still approve the extension before it becomes official.

UPDATE – September 30, 2021: The MSRB issued a notice stating that November 30, 2021, is the deadline for passing the Series 54 exam.

Read the full MSRB notice here.

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