Exam Alert: SEC Issues Bulletin Regarding Diminished Financial Capacity

On June 1, 2015, the SEC issued an investor bulletin about “diminished financial capacity”, which refers to when an individual becomes unable to manage their finances. They recommend a number of steps for individuals to take to prepare for such a condition. Continue reading

Exam AlertOn June 1, 2015, the SEC issued an investor bulletin about “diminished financial capacity”, which refers to when an individual becomes unable to manage their finances. They recommend a number of steps for individuals to take to prepare for such a condition. These steps include:

  • Organize important documents and keep them safe and accessible
  • Give your financial professionals emergency contacts
  • Keep your information and contacts updated
  • Report financial fraud and abuse

Some other options to consider include:

  • Authorizing a durable power of attorney
  • Getting someone you trust involved

Source: Investor Bulletin and Consumer Advisory: Planning for Diminished Capacity and Illness

This alert applies to the Series 6, Series 7, Series 52, Series 65, and Series 66.

Exam Alert: FINRA Revises Public, Non-public Arbitrator Standards

Effective June 26, 2015, FINRA will alter its rules regarding who will be consider a public or non-public arbitrator. The change will make it so that any arbitrator who has worked in the financial industry for any period of time will be considered a non-public arbitrator. Also, arbitrators who represent investors or the financial industry as a significant part of their business will be considered non-public arbitrators, but may become public arbitrators after a cooling-off period. Continue reading

Exam AlertEffective June 26, 2015, FINRA will alter its rules regarding who will be considered a public or non-public arbitrator. The change will make it so that any arbitrator who has worked in the financial industry for any period of time will be considered a non-public arbitrator. Also, arbitrators who represent investors or the financial industry as a significant part of their business will be considered non-public arbitrators, but may become public arbitrators after a cooling-off period. The cooling-off period lasts five years if they were disqualified from being a public arbitrator based on their own actions. The cooling-off period lasts two years if they were disqualified from being a public arbitrator based on someone else’s actions.

Source: SEC Approves Amendments to Arbitration Codes to Revise the Definitions of Non-Public and Public Arbitrator

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 27, Series 28, Series 62, Series 79, and Series 82.

Increase in FINRA & MSRB Exam Fees

Next month both MSRB and FINRA exam fees will increase. Effective April 1, 2015, individuals who register for one of the following exams will be charged the new rates… Continue reading

Next month both MSRB and FINRA exam fees will increase. The Municipal Securities Rulemaking Board (MSRB) will raise their development fee for professional qualification exams from $60 to $150. In addition, the Financial Industry Regulatory Authority (FINRA) will also raise their exam fees by approximately $5-$15 per exam. Effective April 1, 2015, individuals who register for one of the following exams will be charged the new rates:

[Old rate] new rate

Series 4 – Registered Options Principal [$100] $105

Series 6 – Investment Company Products/Variable Contracts Representative [$95] $100

Series 7 – General Securities Representative [$290] $305

Series 9 – General Securities Sales Supervisor – Options Module [$75] $80

Series 10 – General Securities Sales Supervisor – General Module [$120] $125

Series 11 – Assistant Representative – Order Processing [$75] $80

Series 14 – Compliance Official [$335] $350

Series 16 – Supervisory Analyst [$230] $240

Series 17 – Limited Registered Representative [$75] $80

Series 22 – Direct Participation Programs Representative [$95] $100

Series 23 – General Securities Principal Sales Supervisor Module [$95] $100

Series 24 – General Securities Principal [$115] $120

Series 26 – Investment Company Products/Variable Contracts Principal [$95] $100

Series 27 – Financial and Operations Principal [$115] $120

Series 28 – Introducing Broker-Dealer Financial and Operations Principal [$95] $100

Series 37 – Canada Module of S7 (Options Required) [$175] $185

Series 38 – Canada Module of S7 (No Options Required) [$175] $185

Series 39 – Direct Participation Programs Principal [$90] $95

Series 42 – Registered Options Representative [$70] $75

Series 51 – Municipal Fund Securities Limited Principal [$95] $105 + $150 = $255

Series 52 – Municipal Securities Representative [$120] $130 + $150 = $280

Series 53 – Municipal Securities Principal [$105] $115 + $150 = $265

Series 55 – Limited Representative – Equity Trader [$105] $110

Series 62 – Corporate Securities Limited Representative [$90] $95

Series 72 – Government Securities Representative [$105] $110

Series 79 – Investment Banking Qualification Examination [$290] $305

Series 82 – Limited Representative – Private Securities Offering [$90] $95

Series 86 – Research Analyst – Analysis [$175] $185

Series 87 – Research Analyst – Regulatory [$125] $130

Series 99 – Operations Professional [$125] $130

 

This information came from http://www.finra.org/sites/default/files/rule_filing_file/SR-FINRA-2015-006.pdf and http://www.msrb.org/~/media/Files/SEC-Filings/2015/MSRB-2015-01.ashx?la=en

FINRA Says Big Changes Coming to Securities Exams

Solomon Exam Prep has learned that FINRA is considering making the following changes to the securities exam system… Continue reading

Solomon Exam Prep has learned that FINRA is considering making the following changes to the securities exam system:

  • In 2015, the Series 55 and the Series 56 will be combined to become the Series 57. The Series 57 will not have a prerequisite.  A Series 57 rep will need the Series 24 to become a principal.
  • In 2016, FINRA will begin a new exam, to be called the Securities Industry Essentials exam (SIE).  The SIE will cover basic security industry knowledge and will become a prerequisite to the Series 6, Series 7, Series 22, Series 57, Series 79, Series 82, Series 86/87, and Series 99. You will not need be sponsored by a FINRA member firm to take the SIE.  SIE exam results will not appear in BrokerCheck.
  • After passing the SIE, individuals can continue on to what FINRA is calling a “top-off exam” for the Series 6, Series 7, Series 79, Series 82 and Series 99.  So, for example, if someone wants to be Series 7 and Series 79 registered, the individual will take and pass the SIE then take and pass the top-off exams for the Series 7 and Series 79. FINRA says the SIE is estimated to be 100 questions, and the top-off exams will consist of the remaining balance of questions (i.e. Series 7 currently has 250 questions, so the Series 7 top-off would contain 150 questions.)
  • Those who are currently registered will be grandfathered in and will not need to take the SIE.
  • Individuals who have been out of the industry 2-4 years will only need to take the top off.  Individuals who have been out of the industry for more than four years will need to take the SIE and top off.
  • FINRA will be retiring the Series 62 exam.

Follow Solomon Exam Prep as we keep you up-to-date on these important changes.

Exam Alert: FINRA Allows Arbitrators to Make Mid-case Referrals in Cases of Serious Threats

Effective October 27, 2014, FINRA has revised its arbitration rules regarding when arbitrators may refer matters to FINRA for disciplinary investigation. Continue reading

Exam AlertEffective October 27, 2014, FINRA has revised its arbitration rules regarding when arbitrators may refer matters to FINRA for disciplinary investigation. Arbitrators may now make such referrals during an arbitration if they become aware of an issue that they believe poses a serious threat that will harm investors unless immediate action is taken. Previously, arbitrators could not make referrals until the conclusion of a case.

Source: Regulatory Notice 14-42: SEC Approves Amendments to the Arbitration Codes to Expand Arbitrators’ Authority to Make Referrals During an Arbitration Proceeding

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, and Series 82.

Exam Alert: FINRA Adds Additional FOCUS Report Supplement

Effective December 31, 2014, certain firms that are required to file FOCUS reports will be required to file an additional form called the Supplemental Inventory Schedule. Continue reading

Exam AlertEffective December 31, 2014, certain firms that are required to file FOCUS reports will be required to file an additional form called the Supplemental Inventory Schedule. On this form, firms report their gross long and short inventory positions in specified categories of securities and commodities. The requirement does not apply to firms that have (1) a minimum dollar net capital or liquid capital requirement of less than $100,000 or (2) inventory positions consisting only of money market mutual funds.

Source: FINRA Regulatory Notice 14-43: SEC Approves Supplemental Inventory Schedule

This alert applies to the Series 26 and Series 99.

Exam Alert: FINRA Changes TRACE Rules Regarding Trades in Asset-Backed Securities and Reduces Reporting Times

Effective April 27, 2015, FINRA will revise the definition of “asset-backed security” under its rules. Asset-backed securities will be required to be reported no later than 45 minutes from the time of execution, with minor exceptions. Continue reading

Effective April 27, 2015, FINRA will revise the definition of “asset-backed security” under its rules. The new definition will exclude mortgage-backed securities, certain SBA-backed securities, and collateralized debt, loan, and bond obligations. Dissemination of trades in asset-backed securities will be limited to this more narrow group of securities, but will include additional types of transactions. These transactions include Rule 144A transactions, list or fixed offering price transactions, and takedown transactions.

Asset-backed securities will be required to be reported no later than 45 minutes from the time of execution, with minor exceptions for transactions executed shortly before the TRACE system closes and when the TRACE system is closed.

Source: FINRA Regulatory Notice 14-34: SEC Approves Amendments to Disseminate Additional Asset-Backed Securities Transactions and to Reduce the Reporting Time for Such Transactions

This applies to the Series 7, Series 24, and Series 62.

Exam Alert: FINRA Excludes Research Reports on Exchange-Listed Securities From Filing Requirement

Effective July 11, 2014, FINRA revised its rules on filing retail communications. The new rules do not require firms to file research reports on securities listed on national exchanges, except for certain research reports on investment companies. Continue reading

Effective July 11, 2014, FINRA revised its rules on filing retail communications. Generally, FINRA requires firms to file retail communications on registered securities within ten business days of first use. The new rules exclude from filing research reports on securities listed on national exchanges. However, firms must still file certain research reports on investment companies. Specifically, research reports on open-end investment companies, unit investment trusts, and face-amount certificate companies must still be filed if they will be distributed to prospective investors.

Additionally, FINRA clarified that free-writing prospectuses that are exempt from the SEC’s filing requirements do not need to be filed with FINRA.

Retail communications are written communications, including electronic communications, that will be distributed or made available to more than 25 retail investors within any 30-calendar-day period. “Retail Investor” is defined as any person other than an institutional investor, regardless of whether the person has an account with the firm.

A research report is a written communication that includes information, analysis, and/or recommendations on a security.

Open-end investment companies, also known as mutual funds, are companies that offer shares of a portfolio of securities in the form of a fund to the public. Every time shares in the fund are purchased, the shares are issued new by the mutual fund company. Additionally, when shareholders wish to sell their shares, they must sell them back to the mutual fund company. The mutual fund company will then “redeem” them and expire the shares.

A unit investment trust (UIT) is an investment company that buys and holds a fixed portfolio of securities that are put into a trust in “units” that are sold to investors (unit holders). UITs have a stated termination date that varies according to the type of investments in the portfolio. A UIT in bonds may have as much as a 30-year life; a UIT in stocks may mature in one year or less. Unit holders receive a share of the principal at termination, and any income earned is distributed to investors in periodic payments of dividends or interest.

A face-amount certificate company is an investment company that issues debt securities called face-amount certificates backed by assets such as real property or other securities. Issuers of face-amount certificates promise to pay a stated amount (face-amount) to the investor at a specified time in the future. In return, investors pay the issuer a fixed amount of money either as a lump sum payment or in periodic installments. The rate of return is calculated by comparing the amount paid into the investment and the face-amount received.

A free-writing prospectus (FWP) is any written offer to sell or a solicitation to buy the securities in an offering, distributed during the cooling-off period, after a registration statement has been filed. It is not required to have the detail or depth of information of the preliminary prospectus.

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 82, and Series 99.

Source: FINRA Regulatory Notice 14-30: SEC Approves Amendments to FINRA Rule 2210 to Exclude Research Reports on Exchange-Listed Securities From Filing Requirements and Clarify the Standards Applicable to Free Writing Prospectuses

Exam Alert: FINRA Provides Information to the Public on Dark Pool Transactions and 144A Transactions

On June 2, 2014, FINRA began providing information to the investing public about the transactions that occur on alternative trading systems (ATSs), including “dark pools.” On June 30, 2014, FINRA began providing information to the investing public about 144A transactions in corporate debt. Continue reading

On June 2, 2014, FINRA began providing information to the investing public about the transactions that occur on alternative trading systems (ATSs), including “dark pools.” Investors can see the total shares traded each week at each ATS. The information is available for free to non-professionals at FINRA’s website. Professionals must purchase a subscription to access the data.

On June 30, 2014, FINRA began providing information to the investing public about 144A transactions in corporate debt. 144A transactions are resales of corporate debt securities to large institutions called qualified institutional buyers (QIBs). Nearly 20 percent of the trading volume in corporate debt securities were 144A transactions in the first quarter of 2014. 144A issues are often foreign IPOs.

Information on 144A transactions will be disseminated through the Trade Reporting and Compliance Engine (TRACE) and through FINRA’s Market Data Center. The standards for dissemination will be the same as for non-144A transactions: a dissemination cap of $5 million for investment-grade corporate debt transactions, and a dissemination cap of $1 million for high-yield corporate debt transactions. 144A transactions are also subject to the same 15 minute reporting requirement as non-144A corporate debt transactions.

This alert applies to the Series 7, Series 24, Series 62, Series 79, and Series 82.

Sources:
FINRA Makes Dark Pool Data Available Free to the Investing Public
FINRA Brings 144A Corporate Debt Transactions Into the Light
FINRA Shines More Light on Some Private Bond Trades

Exam Alert: FINRA Revises OATS, ORF, and ADF/TRF Trade Reporting Rules

FINRA is revising the trade reporting rules for the Order Audit Trail System (OATS) and for FINRA facilities. The changes require… Continue reading

FINRA is revising the trade reporting rules for the Order Audit Trail System (OATS) and for FINRA facilities. The changes require:

  • reporting additional times for certain transactions
  • expressing trade times in milliseconds
  • linking reversal reports to the original trade
  • reporting trades on non-business days and trades that are over a year old to FINRA facilities
  • using a new “step-in” indicator (when a firm takes over a position from another firm)
  • keeping declined trades in the system so they may still be cancelled, corrected, or accepted

Effective April 7, 2014, FINRA has modified the rules for the Order Audit Trail System (OATS).

Effective September 15, 2014, FINRA will modify the rules for the OTC Reporting Facility (ORF).

Effective September 29, 2014, FINRA will require firms to report the time of trades in milliseconds when reporting to the Alternative Display Facility (ADF) or to Trade Reporting Facilities (TRFs).

FINRA will implement the other changes to ADF and TRF reporting rules in the first quarter of 2015.

Source: FINRA Regulatory Notice 14-21: SEC Approves Amendments to Equity Trade Reporting and OATS Rules

This alert applies to the Series 7, Series 24, Series 55, and Series 62.