Preparing for the SIE, Series 63, Series 79, Series 82, or another securities licensing exam? Read about one Solomon Exam Prep student’s path to success. Continue reading
Passing a securities licensing exam is no small feat, but four? Solomon Exam Prep recently reached out to Fernando Russo, Vice President of Investment Banking at Young America Capital, to learn more about his success in passing the SIE, Series 82, Series 63, and Series 79 exams (in that order). Whether you need to pass one or multiple exams to reach your career goals, you’ll want to hear about Fernando’s process and helpful tips.
“The content is not rocket science and the math is very simple. It just takes time, dedication and good study materials.”
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?
Fernando Russo: After the SIE I decided to take the 82 first because I wanted to be licensed as soon as possible. The materials for the 82 seemed simple and I felt confident that I could pass. The 63 came right after because it allowed me to offer securities in my state and be fully registered as an investment banker. The 63 is actually very tricky because it is prepared by NASAA and not by FINRA. Some of the materials are similar but the exam is very different from FINRA exams.
I took the 79 last.
I could’ve gone straight for the 79 but I think that taking the 82 was a good way to get started. It helps build up confidence and knowledge.
The 82, for some, might feel like a practice exam for the 79.
Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why?
Fernando Russo: The 63 is trickier than most people think it is. The study materials are not as extensive as the 79 but the content is very specific and one needs to remember very detailed pieces of information (dates, percentages, etc.). I was studying a lot (2-3 hours a day during the week and 4-6 hours during weekends) but not getting the scores that I wanted on my practice exams, so I had to go back to the books and memorize 85% of the materials.
I spent 25% more time studying for the 63 than for the 79.
“The audiobooks are great. I would listen to the chapters while driving, while working out and while doing many other activities.”
Solomon Exam Prep: How did you approach studying for your exams?
Fernando Russo: I studied each chapter and then took a practice exam for that specific content or section. If I didn’t do well, I would go back to the materials and do it all over again until I passed. I did that over and over and over until I passed. I also found a lot of help in the notes that are found in the Resources Folder. These are great to find definitions, tables and simple explanations for seemingly complicated terms. The audiobooks are great. I would listen to the chapters while driving, while working out and while doing many other activities.
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?
Fernando Russo: I took all my exams at the same Prometric test center in Chicago, and I did so on Monday mornings. I took Friday off from work and studied all day on Friday and on Saturday. On Sunday, the day before each exam, I did not study at all. Instead of studying I spent the whole day doing a fun activity with my family.
I think that is very necessary to allow the mind to rest before the exam. For each test I studied 30-45 days nonstop and one day of peace before the exam felt necessary. It worked. Each time I woke up the day of the test I felt relaxed and ready.
Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams?
Fernando Russo: Take the practice exams. Take them 1,000 times and then some more. I also recommend studying every day, even 10-15 minutes if the student is swamped with other activities. It keeps the mind engaged and the program moving forward. The content is not rocket science and the math is very simple. It just takes time, dedication and good study materials.
What is the Series 65 exam and how should you prepare for it? Read Solomon Exam Prep’s guide to the NASAA Series 65 exam. Continue reading
What does the NASAA Series 65 allow me to do?
The Series 65, also known as the Uniform Investment Adviser Law Examination, qualifies individuals to give investment advice for a fee. Investment adviser representatives (IARs) use their knowledge to give financial advice and help clients build investment portfolios. IARs might provide general investment advice or recommend a client to invest in a specific security. IARs can also manage client accounts and supervise other IARs.
The organization that creates the test—the North American Securities Administrators Association, or NASAA—works to protect investors in every state, territory, the District of Columbia, Canada, and Mexico. Requiring investment adviser representative candidates to pass the Series 65 is a key tool in the NASAA’s investor protection arsenal. Regulators want to make sure people who are giving investment advice in their state or jurisdiction are competent and will behave legally and ethically.
About the Exam
The Series 65 exam consists of 130 scored and 10 unscored multiple-choice questions covering the four sections of the NASAA Series 65 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. NASAA updates its exam questions regularly to reflect the most current rules and regulations.
Note: Scores are rounded down to the lowest whole number (e.g. 71.9% would be a final score of 71%–not a passing score for the Series 65 exam).
Topics Covered on the Exam
The NASAA divides the Series 65 exam into four sections:
The Series 65 exam covers many topics including the following:
Pooled investments, such as mutual funds, ETFs, and REITs
Annuities and other insurance-based investments
Capital market theory
Special accounts, such as college savings plans
State and federal securities acts and regulations
Ethical practices and fiduciary obligations
Question Types on the Series 65
The Series 65 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 actions might the Federal Reserve take if it wishes to stimulate the economy?
Raise the discount rate
Raise the bank reserve requirements
Raise the margin requirements
Incomplete Sentence Format:
This kind of question has an incomplete sentence followed by four options that present possible conclusions.
A recession is a protracted period of decline in the national economy, typically defined as:
More than two quarters of decreasing GDP
More than two quarters of decline in the housing market
More than two quarters of shrinking M1
More than two quarters of a falling PPI
This type requires you to recognize the one choice that is an exception among the four answer choices presented.
All of the following are tools that the Federal Reserve uses to implement monetary policy except:
Open market operations
Discount window lending
Altering bank reserve requirements
Altering the value of the dollar
This question type has a missing word or phrase, which you must select from the four options provided.
A situation in which short-term securities pay higher yields than long-term securities is considered a(n) _____ yield curve.
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.
A stronger dollar benefits which group?
U.S. investors who want to invest in foreign assets
Overseas investors who want to invest in U.S. assets
I and II
II and III
III and IV
I 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.
Order the following from lowest to highest:
Broker call rate
Federal funds rate
I, IV, III, I
III, II, I, IV
IV, III, I, II
II, IV, I, III
How to Study for the Series 65
Follow Solomon Exam Prep’s proven study system:
Read and understand. It’s simple: read the Solomon Study Guide, carefully. The Series 65 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 Audiobook, which is a word-for-word reading of the Solomon 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 Exam Simulator. Aim to pass at least six full practice exams and try to get your average score to at least an 80; when you reach that point, you are probably ready to sit for the Series 65 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 65 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 recent 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 65: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.
You can pass the NASAA Series 65! It just takes work and determination. Solomon Exam Prep is here to support you on your journey to becoming a registered Investment Adviser Representative.
For more helpful securities exam-related content, study tips, and industry updates, join the Solomon email list. Just click the button below:
Learn about the Solomon Remediation Report, a new analytical feature designed to help students pass their securities licensing exams the first time. Continue reading
Solomon Exam Prep is delighted to announce an advanced analytical feature called a Remediation Report. The Solomon system analyzes a student’s five most recent practice exams and determines whether a student is ready to take his or her exam. If Solomon AI determines that a student is not ready to sit for their exam, then it creates an individual report with personalized guidance on how to remediate and prepare to pass. This custom Remediation Report is sent to the Solomon student’s email inbox.
The Solomon Remediation Report is connected to the Solomon Pass Probability tool, the industry-leading measure of a security exam prep student’s readiness to pass an exam. Solomon Pass Probability is based on thousands of student data points. Once a Solomon student has taken at least five practice exams, the Solomon Pass Probability feature is activated, and the Pass Probability metric is available in the student’s dashboard. The Solomon Remediation Report provides an additional level of customized study support by helping students focus their efforts and remediate before they sit for their exam.
Watch the latest Solomon Exam Prep video for a complete look at the Solomon learning system and what it offers students and firms. Continue reading
Solomon Exam Prep has helped thousands of financial professionals pass their FINRA, NASAA, MSRB, and NFA licensing exams. Watch the video for a complete look at the Solomon learning system and what it offers students and firms.
To explore Solomon Exam Prep study materials for 21 different securities licensing exams, including the SIE and the Series 3, 6, 7, 14, 22, 24, 26, 27, 28, 50, 51, 52, 53, 54, 63, 65, 66, 79, 82, and 99, visit the Solomon website.
For many when choosing bonds the most important factor is the tax implications. Knowing the after-tax yield and tax-equivalent yield calculations is critical. Continue reading
Bonds can be nice, reliable investments. Pay some money to an issuing company or municipality, receive interest payments twice a year, and then get all of your original investment back sometime down the road. Sounds like a plan.
But which bonds are best for a specific investor? There are many factors for bond investors to consider when choosing which bond to buy, but for many the most important is the tax implications of investing in one bond instead of another. This concern is most prominent when an investor compares a corporate bond to a municipal bond. For reference, a corporate bond is one issued by a corporation or business, while a municipal bond is one issued by a state, city, or municipal agency.
Comparing the tax implications of these bonds is important because the interest payments that investors receive from municipal bonds are typically not taxed at the federal level. Conversely, interest payments on all corporate bonds are subject to federal taxation. This means that someone in the 32% tax bracket will have to give Uncle Sam 32% of his interest received from a corporate bond, while he will not give up any of his interest received from a municipal bond. Additionally, an investor does not pay state taxes on municipal bond interest if the bond is issued in the state in which the investor lives. Corporate bond interest, on the other hand, is always subject to state tax.
interest payments taxed federally
interest payments subject to state tax
interest payments not federally taxed
interest payments not taxed by state if issued in state local to investor
For these reasons, when comparing a corporate bond to a municipal bond, understanding the after-tax yield and the tax-equivalent or corporate-equivalent yield is essential. This is true both for investors and for those who will be taking many of the FINRA, NASAA, and MSRB exams. So let’s look at how to calculate those yields.
First the after-tax yield. The after-tax yield tells you the amount of a corporate bond’s annual interest payment that an investor will take home after accounting for taxes he will be assessed on that interest. Once that amount is known, the investor can compare it to the yield he would receive from a specific municipal bond and see which potential investment would put more money in his pocket. When calculating the after-tax yield, start with the annual interest percentage (a.k.a. coupon percentage) of the corporate bond, which represents the percent of the bond’s par value that an investor receives each year in interest. For instance, a corporate bond that has a $1,000 par value and an interest rate of 8% will pay an investor $80 dollars in annual interest ($1,000 x 0.08 = $80). You then multiply the coupon percentage by 1 minus the taxes an investor will pay on the corporate bond that he will not pay on the municipal bond that he is considering.
This is where it sometimes gets tricky. What taxes will an investor not pay when investing in a municipal bond that he will pay when investing in a corporate bond? Remember that for just about all municipal bonds, investors do not pay federal tax on interest received.
The formula for after tax yield is:
After-tax yield = Corporate Bond Annual Interest Rate x ( 1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)
On the other hand, an investor always pays federal taxes on interest received from a corporate bond. Additionally, an investor does not pay state taxes on interest payments from a municipal bond issued in the state in which the investor lives.
On the other hand, an investor always pays state taxes on interest received from corporate bonds. So if you see an exam question in which you need to calculate the after-tax yield of a corporate bond to compare it the yield on a municipal bond, you will always subtract the investor’s federal income tax rate from 1 in the equation. You will also subtract the investor’s state tax rate from 1 if the municipal bond is issued in the investor’s state of residence.
Seems simple, right? Here’s a question to provide context:
Marilyn is a resident of Kentucky. She is considering a bond issued by XYZ Corporation. The bond comes with a 7% annual interest rate. Marilyn is also interested in purchasing municipal bonds issued in Ohio. If Marilyn has a federal tax rate of 28% and Kentucky’s state tax rate is 4%, what is the after-tax yield on XYZ’s bond?
To answer this question, begin with the interest rate on the XYZ bond, which is 7%. Then subtract from 1 the taxes Marilyn will not pay if she invests in the municipal bond in question. She will not pay federal taxes on the municipal bond interest, so you would subtract 28%, or .28. However, because Marilyn is a resident of Kentucky and the municipal bonds she is considering are issued in Ohio, she will pay state taxes on the bond. That means you would not subtract her state tax rate (0.04) from 1. After subtracting .28 from 1 to get 0.72, you multiply that amount by the 7% coupon payment. Doing so gives you a value of 5.04 (7 x 0.72 = 5.04%). This means that the interest amount she would take home from the XYZ bond would be equivalent to what she would receive from a municipal bond issued in Ohio that has a 5.04% interest payment. If she can get a bond issued in Ohio that has a higher interest payment than 5.04%, she would take home more money in annual interest payments than she would from the XYZ bond.
The second approach an investor can take to compare how a potential bond investment will be affected by taxation is to calculate the tax-equivalent yield (TEY). This calculation is also known as the corporate-equivalent yield (CEY). The TEY/CEY measures the yield that a corporate bond will have to pay to be equivalent to a given municipal bond after accounting for taxes due. To calculate this yield, you take the annual interest of the given municipal bond and divide it by 1 minus the taxes the investor will not pay if she invests in the municipal bond that she would pay if she invested in a corporate bond.
Here’s the formula for tax-equivalent yield:
Tax-equivalent yield = Municipal Bond Annual Interest Rate / (1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)
When determining what tax rates to subtract from 1 in the denominator, the same principal as described above applies. That is, the investor will not have to pay federal tax on the municipal bond, so her federal rate is always subtracted from 1. The investor will also not have to pay state tax on the bond if it is issued in the state in which she lives. If that is the case, the investor’s state tax rate should also be subtracted from 1. However, if the investor lives in a different state than the state in which the bond is issued, she will have to pay state taxes on the interest payments. In that case, her state tax rate would not be subtracted from 1.
Here’s another question to provide context.
Franz, a resident of Michigan, has purchased a Michigan municipal bond that pays 4% annual interest. If his federal tax bracket is 30% and the Michigan state tax rate is 4%, what interest rate would he need to receive on a corporate bond to have a comparable rate after accounting for taxes owed?
To answer this question, begin with the interest rate on the Michigan municipal bond, which is 4%. Then subtract from 1 the taxes that Franz will not pay on that bond that he would pay if he invested in a corporate bond. He wouldn’t pay federal taxes on the municipal bond interest, so you would subtract 0.30 from 1. Additionally, since the bond is issued in Michigan and he is a Michigan resident, Franz will not pay state taxes on the bond. So you subtract Michigan’s state tax rate of 4%, or 0.04, from 1 as well. After subtracting 0.30 and 0.04 from 1 to get 0.66, you divide that number into the 4% municipal bond annual interest. Doing so gives a value of 6.06 (4 / 0.66 = 6.06). This means Franz would need to find a corporate bond that pays 6.06% in annual interest to match the amount of interest he will take home annually from the Michigan municipal bond after accounting for taxes.
Many people are confused by the concepts of the after-tax and tax-equivalent yields. But you don’t have to be one of them. Just follow this simple approach and any questions you see on this topic will not be overly taxing.
Read Solomon Exam Prep’s expert guide for answering state registration questions on the Series 63, Series 65, and Series 66 exams. Continue reading
If you’re planning to take the NASAASeries 63, Series 65, or Series 66 exam, you can expect to see questions about when broker-dealers and their securities agents need to register in a particular state. You can also expect to see questions about when investment advisers and investment adviser representatives need to register in a state. Instead of feeling intimidated when confronted with such questions, you should relax, smile, and feel confident. That’s because if you follow the simple rules that we’re about to describe, you should get each of these questions right.
Broker-Dealers and Their Agents
First let’s deal with questions about state registration for broker-dealers (BDs) and their agents. Rule number one here is that when a U.S.-based BD or one of its agents has an office located in a state, that BD or agent must register in the state. It does not matter which types of clients a BD or BD agent with an office in a state has or what types of securities those clients buy from the BD or agent. A BD or agent with an office in a state must register in that state. Period.
What about a BD or BD agent that doesn’t have an office in a state? If a BD or BD agent without an office in a state has any non-institutional clients in that state, the BD or agent must register there. However, if the BD or agent without an office in a state has only institutional clients in the state, no registration in that state is required. Institutional clients include the issuers of securities involved in a specific transaction; other broker-dealers; and institutional buyers, which are big-money entities such as banks, insurance companies, mutual funds, and pension and profit-sharing plans.
So when presented with a question about whether a specific broker-dealer or one of its agents must register in a given state or states, there are two potential questions to ask yourself. The first question is: “Does the broker-dealer or BD agent have an office in the state?” If the answer is yes, it’s simple: the BD or agent must register in that state. End of questions. However, if the answer is no, move on to the second question: “Does the BD or BD agent have any non-institutional clients in the state?” If the answer is yes, the BD or agent must register in the state; if the answer is no, they do not need to register in the state.
Here’s a flowchart to help you remember the question-answering process:
Investment Advisers and Their Representatives
Now let’s look at the state registration requirements for investment advisers that do not register with the SEC. If the investment adviser has an office in the state, it must register there. If the investment adviser doesn’t have an office in the state but has had more than five non-institutional clients in the state during the past twelve months, it also must register there. The rules are the same for investment adviser representatives who work for an investment adviser that does not register with the SEC.
Investment adviser representatives who work for investment advisers that register with the SEC — also known as federal covered advisors — may need to register with the state if they have an office in the state.
So if you see a question about state registration requirements for non-SEC registered investment advisers or their investment adviser representatives, the first question to ask yourself is: “Does the IA or IAR have an office in the state?” If the answer is yes, you know the IA or IAR must register there. If the answer is no, move on to the second question: “Has the IA or IAR had more than five non-institutional clients in the state during the preceding twelve months?” If the answer is yes, they must register in the state; if the answer is no, they don’t need to register in the state.
Here’s another flowchart to help you with this type of question:
Remember that if an investment adviser registers with the SEC, it is a federal covered adviser and does not need to register in any state. Instead, a federal covered adviser must notice file to provide investment advice to residents of that state. When it comes to notice filing requirements for federal covered advisers, follow the same thought process as that described above. If the federal covered adviser has an office in a state, it must notice file there. If it has no office in the state but it has had more than five non-institutional clients in the state in the past twelve months, the firm must also notice file there.
Simple, right? So let’s put the suggested thought process into practice by looking at a question like one you may see on your exam.
XYZ Broker Dealer has its main office in State A. It also has offices in States B and C. ABC has non-institutional clients in states A and B, but it only has institutional clients in State C. It does not have an office in State D, but it has three non-institutional clients there. In which states does XYZ need to register?
A. State A only
B. States A and B only
C. States A, B, and C only
D. States A, B, C, and D
Remember the process to follow when you see questions about where a BD must register. There are two possible questions to address as part of that process.
First question: Does the broker-dealer have an office in a state? Answer: XYZ has offices in each of States A, B, and C. Recall that if the answer the first question is “yes, the BD has an office in the state”, then the BD must register in that state. So XYZ needs to register in States A, B, and C.
If the answer to the first question is no, as it is for State D, you move on to the second question: Does the BD have any non-institutional clients in the state? XYZ has non-institutional clients in State D, so the answer is yes to that question. If the answer to the second question is yes, this means the BD must register in the state. Thus, XYZ has to register in State D as well as States A, B, and C. So Choice D is the correct answer.
So now you’re an expert, and you’re one step closer to passing your Series 63, Series 65, or Series 66 exam!
Want more exam tips?
Watch a video version of “How to Answer State Registration Questions on the Series 63, Series 65, and Series 66” on the Solomon YouTube channel, where you’ll find even more exam and study tips!
Solomon Exam Prep has helped thousands pass their securities licensing exams, including the SIE and the Series 3, 6, 7, 14, 22, 24, 26, 27, 28, 50, 51, 52, 53, 54, 63, 65, 66, 79, 82 and 99.
FINRA and the NASAA are now offering Prometric’s ProProctor remote assessment service which allows you to choose where and when you take your security exam. This user-friendly testing platform Continue reading
FINRA and the NASAA are now
offering Prometric’s ProProctor remote assessment service which allows
you to choose where and when you take your security exam. This user-friendly
testing platform offers self-service capabilities, with live agents available
at all times to offer support for candidates if required.
features advanced security measures to ensure the same safety standard is being
met comparable to conventional test centers, guaranteeing a consistent and fair
testing experience for all candidates. These advanced security measures include
multiple ID authentication and facial detection checks, personal security
checks, 100% live-monitoring, 360-degree environmental readiness checks, live
security agents, proactive protocols such as device checks, as well as record
and review functionalities.
Each test candidate is assigned three agents to ensure
the exam is administered safely and securely, with a proctor present throughout
the entire test.
In order to access Prometric’s ProProctor system, you
must install an application on your laptop or desktop and perform a system
It is important to note the following difference with
exams at the traditional test center: online tests via ProProctor are
forward-moving only. No flagging a question and returning to it. No changing
online exams have an onscreen calculator, a virtual scratchpad to capture your
notes digitally as well as highlight and strikethrough functionality, which
allow you to mark through or bring attention to the portions of the displayed
and firms may schedule online test appointments for the following six exams:
the SIE, Series 6, Series 7, Series 63, Series 65, and Series 66.
It was previously announced that FINRA and NASAA had been working to introduce an online testing service as an alternative to candidates taking their exam at traditional test centers, to be launched Continue reading
It was previously announced that FINRA and NASAA had been
working to introduce an online testing service as an alternative to candidates
taking their exam at traditional test centers, to be launched on May 24th.
FINRA has now announced that this service, which is
currently in its pilot phase, requires further validation before it can be
implemented and therefore will not be launched on May 24th as
planned. This also means that there will be a delay in booking appointment
times for the five exams that will be included in its initial launch, including
the SIE, Series 6, Series 7, Series 63, and Series 66 exams.
FINRA has also updated policies for test candidates,
extending enrollment windows that have either expired, or are due to expire
between March 16th and June 30th, 2020. This includes all
FINRA, NASAA and MSRB exam enrollment dates, with affected enrollment windows
being systematically updated in CRD.
Prometric will continue to reopen test centers in accordance
with local, state and federal regulations. You can check their Site Openings page, which is
continually being updated. You can also read more about the Prometric policies
to ensure candidate safety on their Covid-19 Update page.
If your Solomon Exam Prep materials are due to expire
before June 1st, contact Customer Service on 503 601 0212 or by
email at firstname.lastname@example.org
for a complimentary extension until August 1st.
It has now been announced that FINRA and NASAA plan to implement a new remote testing service, which will allow exam candidates to take selected exams using a camera-equipped computer. Continue reading
Due to the COVID-19 pandemic, on March 17
Prometric closed its testing centers in the US and Canada, with these
closures being extended until May 31st. It has now been announced
that FINRA and NASAA plan to implement a new remote testing service, which will
allow exam candidates to take selected exams using a camera-equipped computer.
Exam testing will continue to be administered by Prometric, with their staff
supervising the exams via video and online monitoring tools.
remote testing service is currently in its trial phase, FINRA plans to launch
the service “in the near future” for selected exams, including the SIE, Series
6, Series 7, Series 63 and Series 66. It is expected that further exams will be
included in the weeks following the launch of this innovative service.
also announced that it plans to resume testing at certain test centers on May 1st,
with limited capacity to maintain safe social distancing protocols. Further
information will be updated on the Prometric
Coronavirus Update page.
Solomon Exam Prep is offering complimentary extensions for students who have Solomon study materials expiring before June 1st. Contact Customer Service at email@example.com or phone us on 503 601 0212 to have your Solomon study materials extended until August 1st.
Notice filing is a topic that often confuses people studying for the Series 63 Uniform Securities Agent State Law exam or the Series 65 Uniform Continue reading
Notice filing is a topic that often confuses people studying for the Series 63 Uniform Securities Agent State Law exam or the Series 65 Uniform Investment Adviser Law exam or the Series 66 Uniform Combined State Law exam. Some mistakenly assume that notice filing is the same as state registration. While there are some similarities, notice filing and state registration are different and the Series 63, Series 65 and Series 66 exams require that you understand the distinction.
So what is notice filing, and how does it work?
To understand the concept of a notice filing, it’s important to know a bit about the entities to which it applies: federal covered advisers and federal covered securities. First, let’s look at federal covered advisers. A federal covered adviser is an SEC-registered adviser that offers investment advice in exchange for compensation. Any adviser with assets under management of $110 million must register as a federal covered adviser.
When it comes to registration, advisers are not subject to double registration, meaning that an investment adviser registered with the SEC does not need to register with any state, and an adviser that is required to register with a state does not register with the SEC. For federal covered advisers, this makes life easier because a federal covered adviser only needs to go through the rigorous registration process one time. Instead of registering in a state, on Form ADV that it files with the SEC, a federal covered adviser lists any states in which it will either have an office or more than five retail clients in a twelve-month period. The SEC then gives notice to the administrator in any state noted on the adviser’s form ADV that the adviser intends to do business in that state. This is a notice filing: a simple heads-up to the state administrator that the advisor will be doing business in its state. Depending on the requirements of the given state, the adviser may be asked to file additional paperwork and pay a fee before offering advice to clients in the state. But, happy day, the adviser gets to skip the state registration process.
Now let’s discuss notice filing for federal covered securities. What is a federal covered security? Well, many of the securities that the average investor is likely to own are federal covered securities. For example, any security traded on an exchange like the NYSE or NASDAQ is a federal covered security. Additionally, securities issued by investment companies that are registered under the Investment Company Act of 1940, such as mutual funds and closed-end funds, are federal covered securities. A federal covered security must be registered with the SEC, but the issuing company is not required to register it with any state. Instead, the issuer must note on its registration statement any state in which it intends to sell the security. The SEC then notifies the administrator of each noted state of the issuer’s intention to sell in that state. Sound familiar? It should because this is also a notice filing: a simple shout-out by the SEC to the state administrator that the security will be sold in its state. Typically the issuer is then required to submit its SEC registration documents to the administrator and pay a filing fee, but, and this is a biggie, the issuer does not need to go through the demanding state registration process in order to sell its securities in the state.
So it’s actually pretty simple. A federal covered security or adviser is registered once with the big boys at the SEC. After that, it’s all smooth sailing. No need for further registration, just a simple notice given to states in which the security will be sold or the adviser will offer investment advice.
Now that you’ve learned the difference between notice filing and state registration, let’s do a practice question to get you ready for the Series 63, Series 65 or Series 66 exam:
Spencer Investments is a federal covered investment adviser doing business in Oregon. The Administrator in Oregon requires a notice filing. Does this mean Spencer Investments must register in Oregon as well as with the SEC?
A. No. What it means is that Spencer needs to request that the SEC send the Oregon Administrator a copy of Spencer’s Form ADV, and Spencer needs to pay a notice filing fee to the Oregon Administrator. B. Yes. Spencer does business in Oregon, so it must register in Oregon. C. Spencer Investments does not have to register in Oregon but does need to fill out and file all the paperwork for registration so the Oregon Administrator is on “notice” regarding Spencer’s business in Oregon. D. Yes. The Oregon requirements for registration may be more stringent than the SEC’s, so Spencer must comply with them to do business in Oregon.
Correct Answer: A. No. What it means is that Spencer needs to request that the SEC send the Oregon Administrator a copy of Spencer’s Form ADV, and Spencer needs to pay Oregon a notice filing fee. A notice filing for an investment advisor is not a registration but means the registration papers Spencer Investments filed with the SEC are shared with the Oregon Administrator, and the Oregon Administrator receives a filing fee.