Understanding FINRA Rule 1210 on Registration Requirements

FINRA Rule 1210 outlines registration requirements for individuals who work in securities or investment banking. Essentially, this rule says that any financial professional who’s engaged in investment banking or securities business for a FINRA member firm must also be registered with FINRA. The only exception is if the individual is exempt from registration following another FINRA rule.

SmartAsset’s Advisor Marketing Platform (AMP) offers financial advisors services like client lead generation, automated marketing and more. Learn about SmartAsset AMP today.

FINRA Rule 1210 Explained

Like other FINRA rules, Rule 1210 is intended to ensure that individuals working in securities and investment banking have the necessary experience and knowledge. Rule 1210 applies to two broad categories of financial professionals:

• Representatives. Representatives are individuals who are licensed by FINRA to perform specific functions within the securities or investment banking industry. Representative-level FINRA licenses include the Series 6 and Series 7 licenses, both of which authorize holders to buy and sell securities. The Series 7 license permits the sale of a broader range of securities. Meanwhile, the Series 6 license is limited to mutual funds, variable annuities, variable life insurance, unit investment trusts and 529 plans.
• Principals. Principals are financial professionals who are responsible for supervising other individuals. Principal-level FINRA licenses include Series 24, Series 26 and Series 27.

What’s the purpose of Rule 1210? It exists to ensure that representatives and principals are equipped for their roles, and act responsibly and ethically in their duties. That ties into FINRA’s goal of shielding investors against potentially harmful behaviors and actions, while fostering a culture of integrity.

FINRA Rule 1210 Registration Requirements

Rule 1210 requires registration for all representatives and principals engaged in the investment banking or securities business of a member firm “appropriate to his or her functions and responsibilities as specified in FINRA Rule 1220.” Further, the rule specifies that unless otherwise stated, such persons are not qualified to function in any other capacity other than that for which they’re registered.

In terms of specific registration requirements, representatives and principals must:

• Pass the Securities Industry Essentials (SIE) Exam. This is a basic proficiency test of the examinee’s knowledge of the securities industry.
• Hold one or more FINRA securities licenses as determined by the role they perform within the member firm.

Individuals taking the SIE to meet Rule 1210 registration requirements must follow the SIE rules of conduct. The rules require exam-takers to keep the contents of the exam confidential and to complete their testing without outside help.

Securities License Requirements

Obtaining a securities license means completing one or more FINRA-administered exams. Those seeking a securities license may also be required to meet corequisites or be sponsored by a FINRA member firm or self-reporting organization (SRO) firm.

For example, the SIE is a corequisite for the Series 7 license. Therefore, sponsorship is also required. You don’t need a sponsor for the Series 66 exam, but the Series 7 exam is a co-requisite.

Exam Waivers

Exam requirements — for either the SIE alone or other required exams — may be waived in “exceptional” cases where there is good cause. Good cause means a registrant has substantial experience in fields related to investment banking or securities.

Waivers may also be issued for individuals who are employed by a member firm’s financial services affiliate when certain criteria are met. Registrants who are called to active duty in the Armed Forces can be placed on inactive status and wouldn’t need to re-register when they return to employment with a member firm.

Continuing Education Requirements

Once registered, license-holders must meet continuing education (CE) requirements to maintain their license, per Rule 1210. FINRA continuing education requirements have two parts:

• Regulatory Element. The Regulatory Element is an online training that must be completed by December 31 each year for each registration you hold. The training covers notable rule changes and regulatory developments relevant to your registration category or categories.
• Firm Element. The Firm Element applies to broker-dealers. It requires them to establish a formal training program to keep individuals who are subject to Rule 1210 registration requirements up to date on professional responsibility and topics related to their role. Broker-dealers must maintain accurate records documenting the format of their plan and when training is completed.

Continuing education is mandatory under Rule 1210. The only exception allowed is for registrants who have Active Duty status.

Firm Registration Requirements

So far, we’ve covered registration requirements for advisors under Rule 1210, but there are some firm-specific requirements, as well.

Each member firm (excluding member firms with only one associated person) must have at least two officers or partners who are registered as General Securities Principals. A firm limited in its scope of activities may have two officers or partners who are registered in a principal category under Rule 1220(a).

Additionally, each firm must have at least one person who is:

• Registered as a Financial and Operations Principal or an Introducing Broker-Dealer Financial and Operations Principal
• Designated as a Principal Financial Officer
• Designated as a Principal Operations Officer

Member firms may also be required to have at least one person registered as an Investment Banking Principal, a Research Principal, a Securities Trader Principal and a Registered Options Principal, depending on the nature of the business.

Frequently Asked Questions (FAQs)

What Are the FINRA Rule 1210 Registration Requirements?

FINRA Rule 1210 requires that individuals who work in member firms in an investment banking or securities business capacity must also be registered with FINRA. Registrants must complete the SIE exam and other exams that are required to obtain a FINRA securities license. Advisors who are subject to Rule 1210 registration requirements must also meet FINRA continuing education requirements.

Is an Exam Required for FINRA Rule 1210 Registration?

Generally, yes, all registrants must complete the SIE and any other required exams to obtain a securities license. FINRA does make exceptions for individuals who have considerable experience in fields related to investment banking or securities, and individuals who work for companies affiliated with a FINRA member.

What Happens If You Fail the SIE or Another FINRA License Exam?

If you fail the SIE or another FINRA-administered exam, you can try again after a waiting period has passed. The waiting period is 30 calendar days from the date of your last attempt. If you fail an exam three times or more in succession within two years, the waiting period increases to 180 calendar days from the date of your last failed attempt.

Bottom Line

FINRA rules can sometimes be confusing. Thus it’s important to understand when and how they apply to you to remain compliant. Familiarizing yourself with Rule 1210 registration requirements is a must if you’re planning a career in the financial services industry.

Tips for Growing Your Advisory Business

• One of the biggest challenges of growing an advisory firm is getting your name and brand out there. A solid marketing plan can go a long way toward helping you attract your ideal clients — but sometimes, you might need a little extra help. Partnering with an advisor marketing platform can give your visibility a boost while leaving you free to serve your clients. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service that financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Each securities license exam covers different ground, and it’s important to allow yourself time to adequately prepare. For example, you may need to dedicate 80 to 150 hours of study to get ready for the Series 7 exam. The Series 7 has a reputation for being one of the most difficult to pass. You might consider investing in exam prep courses or other materials to increase your odds of earning a passing grade on the first try.

Photo credit: ©iStock.com/mapo, ©iStock.com/ijeab, ©iStock.com/fizkes