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New FINRA Proposal Governing SEC Exams Could Simplify Registration Process And Address the Challenge of Unlicensed Finders By mid-2017, new rules proposed by the Financial Industry Regulatory Authority (FINRA) could simplify the process by which financial representatives are tested and registered by the SEC, and the same rules hold promise for clarifying SEC accreditation, encouraging cross-training within securities firms, and addressing the issue of unregulated finders.

Writing in the Securities Law Blog, Laura Anthony, a founding partner of Legal and Compliance, LLC, in West Palm Beach, says that the revised SEC licensing and examination structure – which now includes 16 job-specific exams and 11 FINRA-specific exams – has the potential to save money for FINRA, member firms and representatives by reducing exam redundancies, simplifying the registration process and eliminating outdated exams and materials.

Key among the FINRA-suggested changes, which will be implemented in a two-phase process, is the creation of a new beginning-level exam, the Security Industry Essentials, or SIE. The SIE would be open to any interested individual, with or without sponsorship by a broker-dealer, and it would be required for anyone interested in working in the securities industry.

The exam covers four key topic areas, including capital markets, products and risks, regulatory frameworks, and the basics of trading customer accounts and prohibited activities.

Once employed by a securities firm, SIE-accredited representatives would be required to take additional exams related to their specific job function. FINRA views the new SIE approach as a way to pre-qualify potential job applicants, a measure that saves its member firms the time and expense of vetting and testing prospective candidates, whose passing status and scores would be available from FINRA. Start your workday the right way with the news that matters most.

“The SIE could also be a factor in considering exemptions from the registration requirements for finders (unlicensed securities representatives), a topic that continues to be at the forefront for regulators and practitioners alike,” according to Anthony. “Perhaps the SEI, or a variation thereof, could be used as part of a workable regulatory regime related to finders.”

The new FINRA rules suggest other changes to SEC testing and registration requirements: · The current two-year time frame in which registered representatives’ licenses expire if they are not employed by a FINRA member firm could be extended up to seven years, if certain conditions are met covering FINRA membership, required forms, work performance and continuing education requirements · The number of required exams for representatives would drop from 16 to eight, while exams would we be eliminated for options representatives, corporate securities and government securities representatives, and order processing assistants.

The current practice of limiting securities licenses to representatives with specific job functions will be eased. Instead, any employee of a member firm can take exams and be licensed in any capacity covered by the firm’s FINRA membership.