The SRO for the issuance and trading of municipal securities, but not enforcement
Municipal Securities Rulemaking Board (MSRB)
The two components that comprise FINRA CE requirements
Regulatory Element and Firm Element
Form filed that must be filed to apply for FINRA registration
U-4
Form that terminates FINRA registration, filed with FINRA within 30 days of termination
U-5
Number of days a firm has to provide written notification of the termination of a representative to FINRA
30 days
Maintains registration information and disciplinary history of all registered persons
Central Registration Depository (CRD)
Officers, management and supervisory personnel of member firms
Registered Principals
Waiting period required before a second attempt on a FINRA qualifications examination
30 days
Waiting period required after three unsuccessful attempts on a FINRA qualifications examination
6 months
Period of time in which updates, such as change of address, must be filed with CRD
30 days
Where the public may check background information of registered representatives and broker-dealers
FINRA Broker Check
When a registered representative must complete Regulatory Element Training for the first time
Within 120 days of the 2nd anniversary of registration
Required frequency for completion of Regulatory Element Training on an ongoing basis
Every three years
Status of persons who have not completed Regulatory Element Training as required
CE Inactive
Frequency with which a member firm must complete a needs analysis and develop a written training plan for its firm element training program
Annually
Loss or prevention of registration resulting from prohibited activities
Statutory disqualification
Sanctions that may be imposed by FINRA when member firms or associated persons violate FINRA rules
Censures, fines, suspensions, expulsions, bars from activity or association with member firms, cease and desist orders (no jail sentences)
Persons exempt from fingerprinting requirements
Persons not involved in securities sales, persons who do not handle cash or have access to books
blue sky laws
A state’s securities laws.
BrokerCheck
An online tool that makes background information on broker-dealers and registered representatives publicly available. This includes information on registration, employment, and disciplinary history.
CE inactive
Occurs when a registered individual fails to complete his Regulatory Element continuing education training. At this point, the individual cannot conduct any activity that requires registration until he completes the proper training.
Central Registration Depository (CRD)
An online database maintained by FINRA containing information about registered representatives, including employment information and disciplinary history.
continuing education
Consists of two mandatory programs, Regulatory Element and Firm Element, that must be completed by securities professionals on an ongoing basis.
covered persons
Associated persons of a broker-dealer that are required to complete Firm Element continuing education on an annual basis. This includes all registered persons of the firm as well as any other individuals that have direct contact with public customers.
Firm Element
A form of continuing education that must be administered by a broker-dealer and completed by all covered persons on an annual basis. Covered persons include all registered individuals of the firm as well as any other person that has direct contact with public customers.
FINRA
A self-regulatory organization that is empowered by and accountable to the SEC. Its main responsibility is to regulate US securities firms and their employees in order to protect investors and maintain fairness in the industry.
Form U5
A document filed by a firm to notify its self-regulatory organization that an individual’s registration has been terminated and why. Generally, it must be filed within 30 days of termination, though termination with cause requires filing within 10 days.
Form U4
A form that is used by an employee of a firm to register with the appropriate regulator. Candidates for registration must include all pertinent background information, such as their educational background, employment history, residential history, and any disciplinary record. Once an individual becomes registered, this information must be maintained and kept current by the individual.
Investment Advisers Act of 1940
A federal legislation that defines and regulates investment advisers.
investment adviser representative (IAR)
An employee of an investment advisory firm that
- provides advice,
- manages client accounts,
- solicits new business, or
- supervises other investment adviser reps.
investment adviser (IA)
Any person or firm that provides securities-related advice on a regular basis for compensation. The compensation the investment adviser receives is the management fee, which is typically the largest single expense of any management company.
MSRB
A self-regulatory organization that is empowered by and accountable to the SEC. Its main responsibility is to regulate the securities firms and professionals that deal in municipal securities. It’s important to note that the MSRB does not regulate the issuers.
parking a registration
A prohibited activity in which a firm sponsors and maintains the registration of an individual who is not employed by the firm
registered principal
An associated person of a firm that is involved in the day-to-day management and supervision of the firm’s investment banking or securities business. Most firms require two principals, and in order to become a principal, an employee must have passed the appropriate qualifica-tion exams.
Regulatory Element
A form of continuing education that must be completed by registered individ-uals within 120 days of their second anniversary of being registered and every three years thereafter. The program focuses on regulatory and compliance issues and any individuals who fail to complete the training become continuing education inactive, meaning they cannot engage in any business that requires registration.
Securities and Exchange Commission (SEC)
A government agency that holds primary responsibility for enforcing federal securities laws and for regulating the securities industry, including the various exchanges. The SEC was created by Congress as part of the Securities Exchange Act of 1934 legislation.
self-regulatory organization (SRO)
A regulatory body, such as FINRA or the MSRB, that is empowered by and accountable to the SEC for regulating certain aspects of the securities industry.
statutory disqualification
Occurs when an individual has been convicted of a felony or a securities-related misdemeanor in the past 10 years. This prevents that person from associating with a firm unless she receives a waiver from FINRA.
wrap account
A special type of account offered by broker-dealers, where a customer pays a single fee for a combination of brokerage services and investment advice. Broker-dealers that offer wrap accounts are required to also be dually registered as investment advisers
