Series 79 - FINRA Limited Representative Investment Banking Exam

Who needs to take the Series 79 Exam?

If you work for a FINRA member firm (are an “associated person” in the language of the regulators) and you work as an investment banker, according to FINRA rules, you must pass the Series 79 exam and register as an Investment Banking Representative. FINRA and the SEC define investment banking as being work that falls into the following two broad categories:

“Advising on or facilitating debt or equity securities offerings through a private placement or a public offering, including but not limited to origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization activities of such offerings, or

Advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions, including, but not limited to rendering a fairness, solvency or similar opinion.”

If you do any of the above, according to FINRA and the SEC, you need to have the Series 79 investment banking registration.

If you want more detail, read FINRA Rule 1031, Registration Requirements, and FINRA Rule 1032, Categories of Representative Registration.

What does the Series 79 qualify me to do?

A Series 79 license qualifies an individual to advise on or facilitate debt or equity offerings through a private placement or public offering or to advise or facilitate mergers or acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions. The Series 79 proves one of the most difficult exams offered by FINRA, even for the most experienced students.

Are there any prerequisites for the Series 79?

There are no official prerequisites for the Series 79 exam. However, accounting, finance and a fairly sophisticated understanding of the capital markets are unstated prerequisites for the Series 79. They are unstated because the industry, as represented by the FINRA Series 79 exam-writing committee, assumes that if you want to be an investment banker you need to know your stuff. Quoting FINRA “As a qualification examination, it is intended to safeguard the investing public by seeking to measure the degree to which each candidate possesses the knowledge, skills and abilities needed to perform the major functions of an entry-level investment banker.” 

How long should I prepare for this exam?

We recommend studying 110 hours over a six-week period.

What is on the Series 79?

The exam is divided into four functional sections.

Section one is “Collection, Analysis and Evaluation of Data.” With 75 questions (43% of the exam) this is the largest section of the Series 79, and, for many, it is the most challenging part of the exam. To answer questions in section one of the Series 79 exam, you need to have a working knowledge of accounting and finance. Section one of the exam requires the test-taker to be able to read financial statements and analyze based on the data.

Section two of the exam, “Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities,” is 43 questions long (25% of the exam). It is the second largest section of the 79 exam and it focuses on the registration of securities with the SEC as well as safe harbors and exemptions from registration.

Section three, “Mergers and Acquisitions, Tender Offers and Financial Restructuring Transactions,” rings in at 34 questions (19% of the exam). Section three focuses on acquisition structures, taxes, accounting methods, bankruptcy, and the role of the sell-side and buy-side advisor during a sale. For most test-takers section three of the Series 79 is the second most challenging section of the exam, in part because much of the material is unique to the investment banking industry.

The fourth section of the exam, “General Securities Industry Regulations,” contains 23 questions (13% of the exam). The material in section four is tested in other FINRA exams and tends to be the part of the 79 exam that most test-takers have the least difficulty with.

How long is the exam?

The exam is five hours long. You can take a break but the clock is ticking while you do so don’t to dawdle. There is no penalty for wrong answers, so if you run short of time, try to answer every question, even if you have to guess.

How many questions are on the exam?

There are 175 scored questions and 10 unscored “pretest” questions, making the Series 79 exam 185 questions long. The 10 unscored ”pretest” questions are not identified and distributed randomly throughout the exam. 

What score do I need to pass the exam?

A score of 73% is required for passing. 

Note: Your score will be rounded down to the next lowest whole number (e.g. 72.9% would be a final score of 72%--not a passing score for the Series 79 Exam).

How does my registration date affect whether I need to take the current version of the exam, or the new top-off version plus the SIE?

If your firm submits your application for registration on or before September 30th, you must take the current version of the exam, and you will have 120 days to take it. (Yes, that means that in theory you could take the current exam as late as January 2019.)

However, if you need to retake the exam, you may be forced to take the new top-off exam plus the SIE. See the next question.

What if an individual fails to pass the current Series 79 exam, and the next exam is after October 1, 2018, will that individual have to take the SIE and the new top-off Series 79 exam?

Yes. But the individual would not be required to wait 30 days because the SIE and the top-off Series 79 exam are different exams from the current Series 79 exam.

How much does the exam cost?

The cost of the exam is $305 at this writing.

How often is the exam updated?

The 14-member FINRA Series 79 exam committee meets regularly and they work hard to keep the questions fresh, accurate and relevant. You should assume that the 79 exam will test current laws and practices.

How hard is the Series 79 exam?

Solomon Exam Prep customers who have passed the Series 79 exam say that it is a difficult exam, particularly for test-takers who do not have education and work experience in accounting and finance. Additionally, the Series 79 exam requires a broad knowledge of the rules, regulations and industry practices that govern US capital markets and investment banking. 

How does the Series 79 compare to the Series 7?

Quotes from individuals who have taken and passed both exams:

“The Series 79 is ten times harder than the Series 7.”

“Like comparing Earth (Series 7) to Jupiter (Series 79).”

“The Series 7 was easy compared to the 79, the 79 is more like the CFA.”

Test-taking strategies for the Series 79 exam

Monitor your time. Most test-takers say that time is a factor. Remember that the exam clock keeps ticking if you take a break.

When you encounter a long question, before you read the entire question, skip to the final lines to find out what is actually being asked, then go back to the beginning of the question and read the question carefully.

You are not penalized for wrong answers so make sure you answer every question.

What do they give me when I go into the exam?

You will receive an exhibits booklet, a simple calculator and a small whiteboard and pen or scratch paper and pencil. You are not allowed to bring any materials with you into the exam room. No food or water, for example. People who have taken the exam recommend being well hydrated before going into the exam.

When will I learn whether I passed?

Immediately at the testing center.

If I fail can I take the Series 79 again?

If you fail the exam, FINRA makes you wait 30 days before you can reschedule. If you fail the test three times, the waiting period is six months.

If you were within ten points of a passing score, Solomon Exam Prep recommends that you redouble your efforts, work very hard, and retake ASAP. The longer you wait, the more you will forget and have to relearn. Also, the sooner you retake the exam the more likely you will encounter questions that you saw before. But the key when you retake is to prepare and learn what you need to. Take a class if you didn't the first time. Take notes on anything you don't understand. Re-read the textbook. Make flash cards. Get a study buddy if you can. Try not to leave anything to chance. You came close the first time and you don't want to have to take the exam a third time.

Is there an alternative securities license?

If your investment banking work is limited to structuring private securities, FINRA says you can register either as an Investment Banking Representative and pass the Series 79 or as a Private Securities Offerings Representative and pass the Series 82 Exam instead. Ask your firm’s compliance officer.

Do I need to take any other securities exams?

According to FINRA the Investment Banking Registration does NOT cover sales or marketing of debt or equity securities to investors or potential investors. In order to make investor presentations an investment banker with the Series 79 registration would also need to be “registered as an General Securities Representative (Series 7), Corporate Securities Representative (Series 62) or Private Securities Offerings Representative (Series 82) depending on the type of offering being made.”

Additionally, in order to comply with state securities regulations most individuals with the 79 investment banking registration pass the NASAA Series 63 exam as well. Check with your firm’s compliance officer to determine if this registration applies to you.

Where can I get additional information about the Series 79?

Additional information can be found on the FINRA website:

If I stop working for my firm, how long will my Series 79 license remain active?

You will have two years between jobs before the license expires.

When you cease working for a firm, your employer will file a Form U5 to terminate your registration. Your next employer will file a Form U4, which will re-register you. As long as you do not exceed two years between employers, your Series 79 license will remain active. 

With the FINRA exam restructure, which exam is right for me?

If you apply to be a representative on or before September 30th, you will take the current version of the representative exam.

If you apply to be a representative on or after October 1st, you will be required to take the SIE and the updated representative exam.

If you are a registered representative and you do not pass the current representative exam, and your next testing date is on or after October 1st, you must take the updated representative exam. Your waiting period will be waived, as the updated exam will be considered a new exam.

If you are not a registered representative and you do not pass the current representative exam, and your next testing date is on or after October 1st, you will be required to take the SIE and the updated representative exam. Your waiting period will be waived, because the SIE and updated exams will both be new exams.

If your registration lapsed between October 1st 2014 and September 30th 2018, and you pre-register within four years of your last registration, you will not need to take the SIE. You will, however, take the updated version of the exam.

General exam questions? See our general FAQs.

For information about Solomon Series 79 exam study materials, please click here.