Securities Licensing:

What are the differences?

• SIE
• Series 6
• 63
• 65
• 66 & 7
• RR vs. IAR vs. CFP
• FINRA and SEC
• Compliance

The Securities Industry Essentials® (SIE®) is a FINRA exam for prospective securities industry professionals.

However, passing the SIE alone does not qualify an individual for registration with a FINRA member firm or to engage in securities business.

To become registered, an individual must pass the SIE and a qualification exam (like the series 6), appropriate for the type of business the individual will engage in.

The series 6 is The Investment Company and Variable Contracts Products Representative Qualification Exam.

It assesses the competency of an entry-level representative to perform their job as an investment company and variable contracts representative, including sales of mutual funds and variable annuities.

With a 6 you can almost sell variable structured settlement annuities, but you still need 1 more license.

The Series 63 is an administrative license that deals in the securities laws that affect securities sales in each state.

Without this license you cannot sell any variable annuities (structured or otherwise) or life insurance.

With a SIE, a series 6 & 63 you can sell

• Mutual funds (closed-end funds on the initial offering only),
• Variable annuities - including some new structured settlement annuities available in 2023,
• Variable life insurance,
• Unit investment trusts (UITs) and
• Municipal fund securities [e.g., 529]

You must be sponsored by a broker dealer for the series 6 & 63, and you will have ongoing, annual FINRA compliance. Having either the SIE alone, without both the 6 or 63 is worthless.

Depending on your level of annual production, it can be tricky to find a place to only hold these as your sole licenses.

These licenses keep you as a broker, only on a suitability standard, and we believe that this may be the only license that both defense and plaintiff brokers can hold without any conflicts of interest.

The Series 7 license is known as the general securities representative (GS) license. It authorizes licensees to sell virtually any type of individual security. This includes common and preferred stocks; call and put options; bonds and other individual fixed income investments; as well as all forms of packaged products.

A candidate who passes the Series 7 exam is qualified for the solicitation, purchase and/or sale of all securities, including but not limited to;

With a series 7 you can sell

• public offerings IPOs and private placements of corporate securities,
• money market funds,
• exchange-traded funds (ETFs),
• real estate investment trusts (REITs),
• government and municipal securities,
• direct participation programs,
• Venture capital and hedge funds

Many new products in our industry are closely related to investments.

To see if they should qualify as a security there is a very simple way to decide.

The Howey Test has been used since the case was settled at the Supreme court in 1946 (SEC v. W.J. Howey Co.)

Howey Test

• An investment of money,
• In a common enterprise,
• With the expectation of profit,
• To be derived from the efforts of others.

There are currently products in the market that already meet this definition.

These products may require more licensing by both the product provider and the broker, than currently either have or may plan to obtain.
Don't believe you are not liable just because you are not licensed.

Take some of the new investment options for attorney fee deferrals.

One option was filed under a Reg D. with the SEC, but none of the brokers selling it have a series 7 or a Broker/Dealer to handle that private placement.

RR vs. IAR

CFP

Who are FINRA and the SEC?

COMPLIANCE

QUESTIONS?