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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What Does “Tender” Mean on Securities Exams?

For a number of securities exams, you should understand the term “tender.” Solomon explains what the term means and how it’s used in the securities industry. Continue reading

When studying for a securities exam such as the FINRA Securities Industry Essentials (SIE) exam and the Series 7, Series 14, Series 24, Series 79, or the MSRB Series 50, Series 52, Series 53, or Series 54, it’s likely you will encounter the word “tender.” This bit of terminology may be confusing at first. But learning the ways “tender” is commonly used in the securities industry will prevent you from getting tripped up when you see it on an exam.

You may have heard this word in connection with stock buybacks. When a company offers to buy its shares back from stockholders, the company is said to be conducting a tender offer. The stockholders who take the company up on the offer are said to be tendering their shares. A company may also make a tender offer to a different company’s shareholders, for example if it wants to acquire the other company. 
  
The word “tender” comes from the field of law. To tender is to make a binding offer to enter into an agreement. (It also has a second meaning of presenting payment, which is why your dollar bill has the phrase “legal tender” on it.) So when you tender a security you own, you are offering to sell it on terms that have been spelled out between you and the other party. In the case of a tender offer, the company must specify these terms when it makes the offer and shareholders must take them or leave them. In many cases, the U.S. Securities and Exchange Commission (SEC) requires that these terms include a window of time during which shareholders who tendered their shares may change their minds. In that case, the “binding offer” is not binding right away. 
  
Another securities-related use of “tender” is when a security gives its owner the right to sell it back to the issuer. Exercising this right is sometimes called tendering the security. For example, a municipal bond might have a tender option that gives the bondholder the right to sell it back to the municipality at a certain time for a certain price. Additionally, some variable-rate municipal securities come with a mandatory tender that is triggered when the rate is adjusted. When this happens, the bondholder must choose between tendering the bond or accepting the new rate. 
  
So if you see the word “tender” on a securities exam, it means that the owner of a security is offering to sell it under specific terms and conditions, and the owner’s ability to back out of the offer may be limited.

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Solomon Poll: Inflation Expectations for 2022

What are inflation and inflation expectations, and why are they important? Learn what these terms mean and the results of the latest Solomon poll. Continue reading

Can you predict what the economic future of the U.S. will be next month? How about next year? If you’re not sure, Solomon Exam Prep suggests you look at leading indicators, which are economic measures that have been found to anticipate a change in the economy. They are also tested subjects on securities licensing exams such as the FINRA Securities Industry Essentials (SIE) exam and the NASAA Investment Adviser (Series 65) exam. 
 
One important leading indicator is inflation. So, we asked Solomon LinkedIn followers to predict whether the rate of inflation in 2022 will increase, decrease, or stay the same. According to the poll, a whopping 81% of respondents believe that inflation will increase in 2022. Ten percent predict that inflation will stay the same, and nine percent think it will decrease.  
 
For securities licensing exams, leading indicators are important to understand because they are believed to have predictive power, and therefore, allow economists to see what the economic future may hold. That is why Solomon Exam Prep study guides for the Securities Industry Essentials (SIE), Series 7, Series 65, and Series 66 all discuss inflation. So, what exactly is inflation and why does it occur? 

What is inflation and why does it happen?

Inflation means an increase in the prices of goods and services and a decline in the purchasing power of a currency. It can be understood as a part of business cycles, which are fluctuations in the economy. A business cycle has four phases. The first phase, expansion, is characterized by an increase in economic activity and above-average economic growth. In this phase, the production of goods rises and unemployment falls. Lenders make credit more available because they believe businesses and people will be able to repay their loans. Available credit means lower interest rates, which fuels expansion, resulting in more jobs. 
  
The expansion phase feels good because jobs are plentiful, and wages rise. But a risk of the expansion phase is the possibility of inflation because increasing wages and available credit tend to boost prices.  Inflation can result when demand for goods and services outstrips their supply. This usually occurs near the end of an expansionary phase, when too much money is chasing too few goods. Inflation can occur because of:

    • High consumer confidence in the economy
    • An economy that has reached its production potential
    • Excess money in the economy
    • Increases in wages and other production costs, such as a rise in commodity prices

What does inflation mean for investors?

With rising prices come rising interest rates. For example, if the cost of living is increasing at 5%, as measured by the Consumer Price Index (CPI), investors will be unwilling to purchase a bond paying 4% and lose purchasing power. Lenders will need to raise interest rates to keep up with inflation. 
  
In an inflationary environment, investors may be less inclined to make long-term investments. The possibility that a long-term bond or other long-term investment will not keep up with inflation may drive investors to short-term and variable-rate bonds. Unfortunately, to grow, many businesses, especially capital-intensive companies such as oil and gas refineries, airlines, and telecommunications companies need to borrow for the long-term. As a result, an inflationary environment can reduce business investment and cause an economic downturn.

What are inflation expectations?

To return to the Solomon LinkedIn poll – does it matter what people think will happen with inflation in the future? The short answer is yes, and there’s even a term for this: inflation expectations. Inflation expectations refer to the rate at which people and businesses expect prices to rise in the future. Inflation expectations are important because they can actually affect the real rate of inflation. For example, if everyone expects prices to increase by two percent over the next year, then businesses will likely raise their prices by two percent or more, and workers will want comparable salary increases.  
 
If the Solomon LinkedIn poll results are any indication, inflation expectations for the next year are that prices will increase. Do you agree that 2022 will see a rise in the rate of inflation? Comment below to share your thoughts on the topic. 
 
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Solomon Exam Prep Celebrates 1,000 LinkedIn Followers

The Solomon Exam Prep LinkedIn community continues to grow, and we couldn’t be happier. Keep reading to find out who our followers are and why they follow the Solomon page. Continue reading

Solomon Exam Prep is excited to celebrate a new milestone: we now have 1,000 followers on the Solomon LinkedIn page! We’d like to extend a sincere thank you to everyone who has joined our LinkedIn community – from those who’ve been following along with us since the page was created in 2010 to the 37 new followers we’ve gained in the past month. We truly appreciate all of your likes, comments, and shares.

The top 5 locations our followers come from:

    • Greater NY City area – 17%
    • Greater Atlanta area – 5%
    • Portland, OR area – 4%
    • Greater Chicago area – 3%
    • Greater Philadelphia area – 3% 


Other locations include the D.C. Metro area, Greater Denver area, Greater Los Angeles area, Dallas/Fort Worth area, and San Francisco Bay Area.

The top 5 industries our followers work in: 

    • Financial Services – 53%
    • Investment Banking – 7%
    • Investment Management – 7%
    • Insurance – 6%
    • Banking – 3% 


The rest work in Higher Education, Real Estate, Education Management, and Management Consulting. 

Not a follower yet? The Solomon LinkedIn page is a place where you can:

    • Stay informed about the latest industry news and trends
    • Get securities licensing exam information and study tips
    • Hear about Solomon product updates and releases
    • Read about Solomon customers’ success stories 


Sound interesting? Join the community! Just follow the link to visit the Solomon LinkedIn page. 

Thank you again to all of our followers for engaging with Solomon and helping us reach this exciting milestone! We look forward to continuing the conversation.

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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November 12 deadline for MSRB Series 54 Municipal Advisor Principal Exam

Principals at municipal advisor firms must pass the Series 54 exam by November 12, 2021, to continue acting as principals. Continue reading

When the Municipal Securities Rulemaking Board (MSRB) created an exam specifically for principals at municipal advisor (MA) firms, the plan was for all MA principals to take it within a year.

The exam, known as the Series 54, was first made available on November 12, 2019. The MSRB required that all MA principals who wanted to continue acting as principals would have to pass the Series 54 by November 12, 2020.

But like many plans in 2020, the MSRB’s plan for the Series 54 was disrupted by Covid-19. With FINRA testing centers shut down for months, and uncertainty regarding when testing would resume, the MSRB added a one-year grace period to its original deadline. MA principals would now have until November 12, 2021, to pass the Series 54 exam.

The regulator recently reminded MA firms that “those who engage in the management, direction or supervision of…municipal advisory activities” will need to pass the Series 54 on or before November 12.

UPDATE: On August 11, the MSRB announced that it would seek SEC approval for an additional extension. The MSRB did not say how long the planned extension would be, but the regulator plans to announce this by September 10. The MSRB also announced an “interim accommodation” allowing those who need to take the Series 54 exam online to do so. Details about how to apply for this accommodation will be posted on MSRB.org no later than August 20.

UPDATE: On September 2, the MSRB announced that it has filed a request with the SEC to extend the Series 54 deadline from November 12 to November 30, 2021. View the blog post about this announcement here.   

What is a Municipal Advisor?

A municipal advisor, or MA, differs from a municipal securities dealer in that an MA does not underwrite and sell municipal securities. Instead, an MA gives advice about structuring an issue of municipal securities, selecting an underwriter, investing the proceeds, and related matters. Unlike a municipal securities dealer, an MA is the municipality’s fiduciary, which means that the MA must put the municipality’s interests before its own. MAs became regulated in a manner like municipal securities dealers as one of the reforms resulting from the 2008 financial crisis.

When MAs first came under the MSRB’s jurisdiction, the MSRB only had one qualification exam for MA personnel: the Series 50, which is taken by representatives and principals alike. During the grace period, principals who have only passed the 50 have been allowed to continue as principals. After the deadline, MA principals will need to have passed both the Series 50 and the Series 54.

Solomon Exam Prep has helped hundreds pass the Series 50 and Series 54 exams.

Solomon offers an innovative suite of exam prep products for the Series 54 to help you pass this difficult test, plus a step-by-step study schedule to tell you how to do it. Choose from an easy-to-understand Study Guide, an Exam Simulator with hundreds of relevant practice questions and detailed rationales, and a Video Lecture to help you learn and highlight the most critical information for the exam.

Solomon recommends at least 40 hours of studying to give yourself the best chance at passing this challenging principal exam.

Do yourself a favor and start studying well before the deadline, and let Solomon help you on your road to success! Explore Solomon’s Series 54 study materials by clicking the link below.

Solomon White Paper: Optimizing On-Boarding in 2021, 7 Key Trends for the Securities Industry

Read Solomon Exam Prep’s analysis of the changing exam prep landscape and what your firm needs to optimize for these changes. Continue reading

The securities industry has experienced rapid change in recent years and the securities exam and securities licensing process has undergone substantial change as well. Solomon Exam Prep has been helping people pass securities licensing exams for nearly 20 years, and with the enormous change in the industry, we are sharing our top 7 most impactful trends in the securities industry as they relate to exam prep in a newly-published white paper titled “Optimizing On-Boarding in 2021: 7 Key Trends for the Securities Industry.” These trends have been gleaned through statistical analysis, and are based in Solomon’s deep understanding of the industry. Our goal is to give compliance and training professionals the tools to craft a unified, data-driven exam prep solution. 

Without the necessary tools, passing a securities exam can be an arduous process for new hires and firms alike. In 2021, it is more important than ever to maximize onboarding efficiency, so using an outdated exam prep solution simply won’t do. Click the download link below to read Solomon Exam Prep’s analysis of the changing exam prep landscape, and what your firm needs to optimize for these changes.

Solomon Exam Prep has helped thousands of students pass their securities 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 Exam Prep website to explore all of our study options.