How to Pass the FINRA Series 24 Exam

Should you take the Series 24 exam? Keep reading to learn what the Series 24 qualifies you to do, what the exam covers, and how you should prepare for it. Continue reading

What is the Series 24 exam?

The Series 24, also called the General Securities Principal Examination, is a FINRA exam that assesses how competent you are to perform the functions of an entry-level principal at a broker-dealer. A “principal” at a broker-dealer is licensed to supervise others working as securities representatives. Therefore, the Series 24 exam tests your knowledge of rules, regulations, and practices in all areas of a firm’s securities business. Passing the Series 24 qualifies you to supervise advertising, market making, trading, and underwriting.

Are there any prerequisites for the Series 24 exam?

Yes, you must also pass the Securities Industry Essentials (SIE) Exam and a representative-level qualification exam, or the Series 16, to obtain a principal registration. These are the principal registrations depending on which corequisites you earn:

    • General Securities Principal: SIE + Series 7 + Series 24
    • Securities Trader Principal: SIE + Series 57 + Series 24
    • Investment Banking Principal: SIE + Series 79 + Series 24
    • Private Securities Offerings Principal: SIE + Series 82 + Series 24
    • Research Principal: SIE + Series 86 and 87 + Series 24 OR Series 16 + Series 24

About the Exam

The Series 24 exam consists of 150 multiple-choice questions worth one point each. In addition, there are 10 unscored experimental questions distributed randomly throughout the exam. You have three hours and 45 minutes to complete the exam, and you must score 70% or higher to pass.

Series 24 exam details

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 Series 24 exam).

Topics Covered on the Exam

FINRA divides the questions on the Series 24 exam into five areas representing the main job functions of a General Securities Principal.

Series 24 exam topics

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 24 Content Outline and use it in conjunction with the Solomon Series 24 Study Guide. The Content Outline is subject to change without notice, so make sure you have the most recent version.

Series 24 Example Questions

The Series 24 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.

If a registered person leaves the securities industry and enrolls in the Maintaining Qualifications Program (MQP) how long can he remain outside of the industry before he will be required to retake his qualification exam(s)?

    1. Two years
    2. Three years
    3. Five years
    4. Seven years
Open Stem Format:

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

In order to use customers’ free credit balances in its business operations, a firm must send a written notification to customers that:

    1. Affirms that their free credit balances are segregated
    2. States the amount of money the firm owes the account
    3. Requests written permission from the customer to borrow from the account
    4. Affirms that all funds will be repaid with interest in 90 days
“Except” (or “Not”) Format:

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

A registered principal is conducting his firm’s annual internal inspection at its OSJs. The principal must do all of the following, except:

    1. Review customer account records for irregularities and abuses
    2. Test policies and procedures for safeguarding customer accounts
    3. Evaluate supervision of customer accounts serviced by branch office managers
    4. Approve all retail communications to be used in the coming year
  1. Answers: 1. C   2. B   3. D

For more Series 24 practice questions, try a free sample of the Solomon Series 24 Exam Simulator. You receive instant feedback on each question with a robust explanation of the correct answer.

Taking the Series 24 Exam

To take the Series 24 exam, you must be associated with and sponsored by a FINRA member firm. Your firm must enroll you to take the exam through FINRA. Once FINRA processes your enrollment, you have a 120-day window in which to schedule and take the exam.

The exam is taken at a Prometric testing center via computer. Like all securities industry exams, the Series 24 is closed-book. The testing center will provide you with any materials you need to take the exam, such as a four-function calculator, erasable note board, dry-erase markers, and noise-cancelling headphones. The inspection and sign-in requirements at testing centers are stringent, so arrive at least 30 minutes before your appointment.

Test-Taking Tips

Here are some basic test-taking strategies to remember when taking your exam. Don’t spend too much time on any one question. This could cause you to run out of time and not get to other questions you know. If you’re not sure about a question, take your best guess and mark it for review. There’s no penalty for guessing, so try to answer every question.

After you’ve answered all the questions, you can go back to any questions you flagged for review. 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 factor in some time to return to the questions you flagged. However, don’t simply skip all of the difficult questions with the plan to answer them later. Instead, make a sincere effort to answer each question before moving on to the next one because your mind is fresher earlier on during the exam.

How to Study for the Series 24 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. To increase your ability to focus while reading, or as an alternative to reading, listen to the Series 24 Audiobook, which is a word-for-word reading of the Study Guide. 
    • 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 Solomon Pass Probability™ score to at least 80%. When you reach that point, you’re probably ready to sit for the Series 24 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 24 Resources folder in your Solomon student account has helpful study tools, including detailed study schedules that you can print out. Or, use the online study schedule and check off tasks as you complete them.
    • 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 24: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the FINRA Series 24 exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming a General Securities Principal.

Explore all Solomon Series 24 exam prep, including the Study Guide, Exam Simulator, Audiobook, and Video Lecture.

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New Edition of Solomon Study Guide for Series 24 Exam Now Available

The 5th edition of the Solomon Series 24 Study Guide covers everything you need to know to pass the Series 24 exam and become a General Securities Principal. Continue reading

Do you already have the Securities Industry Essentials (SIE) Exam and a representative-level qualification exam such as the Series 7 or Series 79 under your belt? If you’re thinking about pursuing a principal-level role at a broker-dealer, then you’ll likely need to pass the Series 24 exam. Also known as the General Securities Principal Qualification Exam (GP), the Series 24 exam assesses how competent you are to perform the job functions of an entry-level principal dependent on your rep-level registration(s).

What does the Series 24 qualify me to do?

When you are a “principal” at a securities firm, it means you’re licensed to supervise others. Therefore, the Series 24 exam tests your knowledge of rules, regulations, and practices in all areas of a firm’s investment banking and securities business. After passing the Series 24, the permitted supervisory activities include regulatory compliance over:

    • advertising
    • market making
    • trading
    • underwriting

As you can probably guess, the Series 24 is a difficult exam that requires dedicated study time with up-to-date, comprehensive materials. To help securities professionals effectively prepare for the Series 24 exam, Solomon Exam Prep is pleased to announce the release of the 5th edition of “The Solomon Exam Prep Guide: Series 24 FINRA General Securities Principal Qualification Examination.”

What changes with this new edition?

The 5th edition of the Study Guide includes the following updates:

    • Revamped coverage of net capital to focus on the most testable facts
    • Coverage of compliance obligations when a firm outsources business functions
    • Information about a new FINRA rule that may require heightened supervision when a rep is appealing a violation
    • Expanded and updated discussion of Regulation D private placements and the SEC’s new definition of accredited investors
    • Extensive coverage of Regulation Best Interest and the new suitability requirements it imposes on broker-dealers
    • Information about the SEC’s new, higher exempt offering dollar caps
    • Expanded coverage of the taping rule for firms who hire associated persons formerly employed by a disciplined firm
    • Additional information about OTC due diligence
    • Coverage of FINRA rule changes for continuing education, permissive registration, and the Maintaining Qualifications Program
    • Revised coverage of FINRA’s updated fingerprinting rules

How do Solomon Series 24 Study Materials help you prepare?

To help prepare candidates for this challenging exam, the Solomon Series 24 Study Guide is continually kept up to date to reflect current rules and regulations, and it covers all key exam topics. Charts, graphs, and practice questions throughout the text support learners in understanding and practicing key concepts.

“If you have to take the Series 24 Exam, you’re probably already a Limited Securities Representative and have passed the SIE and at least one of the representative-level exams. This means you have an idea of what to expect, and you know that serious study and practice is required to pass an exam. Having a study guide that explains concepts in plain English and supports comprehension with helpful graphics, examples, and practice questions is crucial when it comes to retaining the knowledge you need for this exam. Solomon’s 5th edition of the Series 24 Study Guide provides exactly that and has helped thousands of students pass the Series 24 exam.”
Jeremy Solomon
Solomon Exam Prep President and Co-founder

Content updates for the 5th edition of the Solomon Series 24 Study Guide are also reflected in the Solomon Series 24 Exam Simulator. The Exam Simulator complements the Study Guide with over 3,500 practice questions for the Series 24. Hone, track, and assess your knowledge by taking unlimited chapter quizzes and full practice exams to apply the concepts you’re learning.

Series 24 Study Materials

The 5th edition of the Solomon Series 24 Study Guide is available as a digital subscription with a hardcopy upgrade option. You can purchase the Solomon Series 24 Study Guide individually or in a package with supporting Series 24 study products. Customers also have access to free tools and resources, including a study schedule in digital and pdf formats, which helps you master the exam material with maximum efficiency.

To learn more about Solomon Exam Prep’s Series 24 study materials, including Study Guide, Exam Simulator, Audiobook, and Video Lecture, visit the Solomon Series 24 product page.

“I passed the 24 with the help of the audio, book and test questions... The flow charts and extra resources section were extremely helpful in breaking down sections of this "dry" test. The audio was great to review and the book format was easy to read and concise. I felt almost every question I knew what they were asking and I was able to eliminate one or two questions. Don't waste your money with other sites. Solomon will allow you to pass on the first time. Good luck!”
Matthew D.
Orange County, CA
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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!

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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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.

What Are QIBs and Accredited Investors? What’s the Difference?

If you’re studying for securities licensing exams, such as the SIE or the Series 7, then you should understand the terms “accredited investor” and “QIB.” Continue reading

If you’ve been studying for the Series 7, 6, 14, 22, 24, 65, 79, or 82, or the Securities Industry Essentials (SIE), then you’ve had to learn about Regulation D private placements and Rule 144A sales. Regulation D private placements are securities offerings that are exempt from the normal SEC registration process and in many cases are sold only to “accredited investors” or limit the involvement of investors who are not accredited. Rule 144A sales are sales of unregistered securities to large institutional investors known as “qualified institutional buyers” or QIBs for short. 
You may have wondered about the difference between accredited investors and QIBs. On the surface, these may seem similar. Each refers to a category of investor with resources and/or knowledge above and beyond the average retail investor. So why not just have one standard for buyers under both Rule 144A and Regulation D? After all, the purpose of both Regulation D and Rule 144A is the same: to allow wealthier and more sophisticated investors easier access to investments that may be too risky for the average investor.  
To begin to answer this question, we have to start with the fact that wealth and sophistication fall on a spectrum. Investors aren’t neatly divided between small retail investors and huge financial institutions that move millions around without blinking an eye. 

Accredited Investors

You could think of accredited investors as a middle ground between these two extremes. Accredited investors are investors whose financial status or investment knowledge may give them a greater ability to handle the risks inherent in a private placement. There are many ways to qualify as an accredited investor but they all have one thing in common, which is that the SEC believes they indicate an ability to take on risks that regulators believe are unsuitable for most retail investors.

Accredited investors are investors whose financial status or investment knowledge may give them a greater ability to handle the risks inherent in a private placement.

All of the following are considered accredited investors:
  • Banks, broker-dealers, investment advisers, insurance companies, and investment companies
  • Corporations, trusts, partnerships, and LLCs with more than $5 million in assets
  • Most employee benefit plans with more than $5 million in assets
  • The issuer’s directors, executive officers, and general partners
  • If the issuer is a privately owned fund, (such as a hedge fund), a knowledgeable employee of the fund, which means an employee with at least 12 months’ experience working on the fund’s investment activities
  • Individuals with income of $200,000 in each of the last two years, or $300,000 in combination with a spouse or spousal equivalent such as a domestic partner
  • Individuals with a net worth more than $1 million, alone or with a spouse or spousal equivalent, not including primary residence
  • Individuals who hold any of these three designations in good standing:
    • Licensed General Securities Representative (Series 7)
    • Licensed Investment Adviser Representative (Series 65)
    • Licensed Private Securities Offerings Representative (Series 82)
  • Any firm where all owners are accredited investors (e.g., venture capital firms)
  • Any other entity with more than $5 million in investments that was not formed specifically to qualify as an accredited investor; the purpose of this category is to include entities that don’t neatly fit into any of the above categories, such as:
    • Native American tribes
    • Labor unions
    • Government bodies, including those of foreign governments
    • Investment funds created by government bodies
    • New types of business entities that may be introduced by new laws

An accredited investor that is not an individual—such as a business, governmental, or nonprofit entity—is sometimes called an institutional accredited investor (IAI).

Qualified Institutional Buyers

QIBs are a narrower group of large institutional investors. A QIB is a large institutional investor that owns at least $100 million worth of securities, not counting securities issued by its affiliates. For registered broker-dealers, the threshold is lower, just $10 million. A bank must also have a net worth of at least $25 million in order to be considered a QIB. 
If a firm has discretionary authority to invest securities owned by a QIB, those securities count toward whether the firm itself is considered a QIB. So if a broker-dealer has $9 million worth of securities in its own accounts, and holds $1 million worth of securities in a discretionary account belonging to a QIB, then the broker-dealer is itself a QIB.  

Common examples of QIBs include broker-dealers, insurance companies, investment companies, pension plans, and banks. However, any corporation, partnership, or LLC could qualify as a QIB. So can an IAI that owns at least $100 million in securities. Individuals can never be QIBs, regardless of their assets or financial sophistication.

Individuals can never be QIBs, regardless of their assets or financial sophistication.

Rule 144A allows QIBs to buy unregistered securities at any time, and freely trade these shares to other QIBs. In effect, QIBs can trade unregistered shares among themselves with almost the same ease as trading registered shares. Selling unregistered securities to anyone other than a QIB commonly requires a the seller to hold the securities for a period of up to 12 months. 

A QIB will virtually always meet the criteria to be an accredited investor, whereas an accredited investor may fall well short of QIB status.

Over time, other securities laws and regulations have made use of these two well-known categories. For example, in 2019 the SEC gave issuers more flexibility to test the waters with potential investors before deciding whether to go through with a public offering. When deciding which investors were sophisticated enough to receive test-the-waters communications, the SEC limited these communications to QIBs and institutional accredited investors. Additionally, references to institutional accredited investors have become more common, such as when the SEC revamped its rules around integration of offerings in March 2021.  
Know your QIBs from your accredited investors and be ready to pass your securities exam with Solomon Exam Prep.

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January Study Question of the Month

This month’s study question from the Solomon Online Exam Simulator question database is now available. Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Comment below or submit your answer to to be entered to win a $20 Starbucks gift card.***

This question is relevant to the SIE, Series 6, 7, 22, 24, and 82 exams.


Which of the following people would be considered a specified adult?

Answer Choices:

A. A 16 year old with autism

B. A 30 year old

C. A 60 year old with a heart condition

D. An 18 year old in a coma

Correct Answer: D

Explanation: A specified adult is a natural person age 65 and older or a natural person age 18 and older who the member firm reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.

SEC Announces Major Revisions to Registration Exemptions Aimed at “Harmonizing” Regulation A Offerings, Regulation D Private Placements, and Crowdfunding

On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” Continue reading

On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” The changes affect Regulation A, which governs small public offerings; Regulation D, which governs private placements; and Regulation CF, which governs crowdfunding. This system of exemptions allows various small offerings to avoid the normal registration process required by the Securities Act.  
The rule changes should provide a clearer choice as to which exemption is most appropriate to an issuer, based on how much the issuer needs to raise and other factors.
The changes also seek to clarify how issuers can avoid “integration” of exempt offerings. Integration is the risk that exempt offerings will be considered a single offering by the SEC, because the offerings are too similar.
Highlights of the changes include:
  • If two exempt offerings are conducted more than 30 days apart, they are almost always protected from integration.
  • An issuer can “test the waters” with potential investors before deciding which exemption it will use for an offering. Test-the-waters communications solicit interest in a potential offering before the issuer has filed anything with the SEC. Previously, an issuer could only test the waters after deciding that its potential offering would take place under Regulation A.
  • Caps on the amount that may be raised through these exemptions have been increased:
    • Crowdfunding: from $1.07 million to $5 million
    • Regulation A, Tier 2: from $50 million to $75 million 
    • Regulation D, Rule 504: from $5 million to $10 million
  • Make “bad actor” exclusions more consistent across different exemptions.
The rule changes will take effect early next year. Until the changes take effect, securities exam questions will continue to be based on the old rules. FINRA Exams affected by these rule changes include the SIE, Series 6, Series 7, Series 14, Series 22, Series 24, Series 65, Series 66, Series 79, and Series 82.

If You’re a Principal or Operations Professional, Your FINRA Exam Deadline May Be Extended

If you’re a newly promoted principal at your firm, FINRA may have just delivered you some good news. Continue reading

If you’re a newly promoted principal at your firm, FINRA may have just delivered you some good news.

In response to current events, FINRA has adopted a temporary rule change giving many new principals until December 31st to complete their FINRA exams.

To qualify for the extension, the principal must have been promoted from representative by her firm before September 3rd.

Among the principals included in the extension are General Securities Principals (Series 24), Financial and Operations Principals (Series 27 or 28), Investment Company/Variable Contract Limited Principals (Series 26), and Compliance Officers (Series 14).

The extension also applies to one rep-level license. Operations Professionals (Series 99) hired before September 3rd also have until December 31st to pass their exams.

The Solomon Exam Prep team is always on the lookout for how current developments affect the securities industry. For more updates from our Industry News blog, use the subscribe form on this page.

Now Available: Series 24 Audiobook, 4th edition

Solomon Exam Prep is excited to release the 4th edition of Solomon’s Series 24 Exam Audiobook. The Solomon Audiobook is a word-for-word reading of the 4th edition of Solomon’s Series 24 Study Guide.  Continue reading

Solomon Exam Prep is excited to release the 4th edition of the Solomon Series 24 Exam Audiobook.  The Solomon Audiobook is a word-for-word reading of the 4th edition of Solomon Exam Prep’s Series 24 General Securities Principal Exam Study Guide. 
Although the core content of the Solomon Series 24 Exam Study Guide is the same as the previous edition, Solomon Exam Prep has made the following changes in the 4th edition for this important FINRA principal exam:
  • Updated information related to new and changed FINRA rules
  • Added information on SEC Regulation Best Interest
  • Updated tax information for 2020
  • Updates to retirement plan information, most of which is related to the recently enacted SECURE Act which took effect on January 1, 2020 
  • Additional examples and questions to help reinforce important concepts
For those of studying for the FINRA Series 24 exam, Solomon’s Audiobook offers another great way to learn the Series 24 material. Because it’s available as both streaming audio and instant MP3 download, you can conveniently listen on the go with or without Internet access. Solomon Study Guides are written in easy-to-understand language, and Solomon Audiobooks are read by real people who are content experts. Audiobooks can be used in tandem with the Solomon Study Guide, Exam Simulator, and/or Video Lecture to create a well-rounded study experience benefitting a variety of learners. Curious about the many benefits of Solomon Audiobooks?  Visit our blog post to read more:
If you have a current digital subscription to the Solomon Series 24 Exam Audiobook, then you have been automatically updated to the 4th edition on your online Solomon account, at no additional charge. However, if you’d like to be reverted back to the 3rd edition, or if you have any questions about this update, please call us at 503-601-0212 or email and we’ll be happy to help.
And if you’re planning to study for the Series 24 exam, you can explore Solomon Exam Prep’s Series 24 exam study materials here.  The Solomon Series 24 Audiobook is available as an individual item, and it is included in the discounted Audio Premium Package and Total Packages.