The Series 82 gives its holder the authority to conduct private securities transactions, among other activities. The exam is also known as the Private Securities Offerings Representative Exam. Private securities are investments only available for a select group of investors. Here’s how it all works.
Consider working with a financial advisor as you develop or modify you investment strategies and tactics.
Series 82 License and Changes
The Gramm-Leach-Bliley Act of 1999 created the Series 82 license. That act repealed or revised much of the Glass-Steagall Act, which was a 1933 law that separated investment banking from commercial banking. Because the two were separated, commercial banks could not use depositors’ funds for risky investments. Only 10% of their income could come from selling securities. The Gramm-Leach-Bliley Act changed that.
After the repeal of Glass-Steagall, the Securities and Exchange Commission (SEC) removed Series 82 transactional abilities from the Series 62 and Series 7 licenses. The Financial Industry Regulatory Authority (FINRA) established the series an individual license focused on private securities transactions by registered representatives.
The Series 82 exam and all other FINRA representative level exams are comprised of two exams: the Security Industry Essentials (SIE) exam and the Series 82 exam. Rather than taking a two-and-a-half-hour, 100-question exam, candidates take first the 75-question SIE exam and a 50-question Series 82 exam.
Series 82 Exam
The Series 82 exam is sponsored by FINRA and administered at Prometrix test centers around the United States. To take the test, you must be sponsored by an SEC-registered organization. Other than that, there are no other prerequisites. The exam lasts one and a half hours and has 50 multiple choice questions. There are also five additional unscored questions randomly scattered throughout the test.
In order to pass the test, you must get a score of 70% or higher. It costs $40 to take the test, and the recommended study time is 60 to 80 hours. You may use FINRA’s content outline to help you study for the exam.
In order to obtain the Private Securities Offerings registration, candidates must also pass the Security Industry Essentials (SIE) exam. If you passed certain other licensing exams (for example, the Series 7 or 79) before Oct. 1, 2018, you may be able to waive the requirement to take the SIE exam.
The Series 82 Exam has four sections:
Section One — Characteristics of Corporate Securities:
This covers all types of securities in the market. This section tests candidates on equities, debt, asset-backed securities, real estate investment trusts, common stock, preferred stock, and rights and warrants. It also covers investment companies, how they are structured, and different fund variations.
Section Two — Regulation of the Market for Registered and Unregistered Securities:
This tests candidates’ knowledge of the private placement mechanisms involved with securities. It also covers underwriting commitments, financing proposals, distribution, and pricing. Meanwhile, other topics discussed in this section include trading and transactions, the marketing and advertising of private placements, and regulations under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Section Three — Analyzing Corporate Securities and Investment Planning:
This tests candidates’ analysis of corporate securities. As a result, analysis includes cash flow statements for equity securities and balance sheet income statements. Meanwhile, section also covers debt analysis, including bond ratings, call provisions, interest rate risk, and yield curves. It also covers comprehensive market topics, such as fiscal policy, the Federal Reserve Board, and the economy. Finally, Section Three discusses investment planning features like suitability, investment objectives, risk, portfolio construction, constraints, and tax treatment.
Section Four — Handling Customer Accounts and Industry Regulations:
This section covers account documentation and regulatory expectation. It also discusses FINRA rules, client account forms, documentation, investment disclosures, and regulatory filings with the Securities and Exchange Commission.
Benefits of the Series 82 License
The license is broad in scope. Also, it requires licensees to fully understand how all types of debt, equity, and other securities are analyzed, underwritten, and offered to investors. Consequently, the Series 82 license comes in handy if you sell private securities for a commission.
It also lets you structure and sell primary offerings of private placements. As a result, lients will have the security of knowing that their private securities offerings representative knows all of the major job functions of their position.
Series 82 Exam vs. SIE Exam
Private Securities Offerings registration, must pass not only the newly shortened Series 82 exam but also the new SIE exam. Both exams are FINRA tests.
The introductory-level SIE exam targets prospective securities industry professionals. The exam will assess candidates knowledge of basic securities industry information and concepts fundamental to working in the industry. The test covers many topics including the structure of the securities industry markets, regulatory agencies and their functions, types of products and their risks, and prohibited practices.
Passing the SIE exam does not qualify individuals to register with a FINRA member firm or to engage in securities business. To register for and engage in securities business, individuals must now pass the SIE exam and a qualification exam covering specific securities.
Anyone over 18 can take this exam. You can use the SIE to show that prospective employers that you have this basic industry industry knowledge, and all you have left to do is take the shorter qualification exam, such as the Series 82, in order to get your license. SIE results are valid for four years.
Essentially, the SIE exam covers general knowledge topics that the Series 82 and all other FINRA qualification exams once covered. But now the qualification exams are shorter. Meanwhile, you can take the SIE without joining a FINRA member firm. It is a 75 multiple-choice question exam. The passing score, like the Series 82 passing score, is 70%. It costs $60 to take and lasts one hour and 45 minutes. You can study using the FINRA content outline, available on their website.
The Bottom Line
If you’re seeking a Private Securities Offerings registration but also looking for work, consider taking the SIE exam first. You may need a similar strategy if you haven’t joined a FINRA member firm yet. The Series 82 requires joining a FINRA member firm before you take the exam.
However, you can now begin the path towards a FINRA qualification on your own. Showing that you have the initiative to take the SIE exam and the skills to pass it may help you in your career.
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