FINRA Proposes to Restructure Exams

On April 7, 2017, the Financial Industry Regulatory Authority (“FINRA”) published in the Federal Register its proposal (the “Proposal”), filed with the Securities and Exchange Commission on March 8, that would consolidate registration rules, restructure the representative-level qualification examination and amend continuing education requirements.  Among other things, the Proposal would create a new exam, the Securities Industry Essentials (the “SIE”).  The SIE could be taken by persons not associated with a specific firm, but would be a prerequisite for other representative exams, and would be good for four years.  The SIE would be accompanied by more tailored series examinations, taking out the general knowledge portion and focusing more on the specific knowledge needed for that part of the industry.  Among the other simplifications, the new rules would allow registration by a person associated with a domestic firm in any capacity – even if the person is not currently working or planning to work immediately in that capacity – so long as the firm itself had these permissions.  And an individual with a permissive registration could be supervised by a non-registered person as long as an assigned registered person checked in periodically with the supervisor.  Registrations in effect as of the effective date of the new rules, and registrations that were in effect up to two years before and are renewed within 2 years of the prior termination of registration, would not be effected.  Individuals would still have generally only two years, however, to find a new job and re-register with a member firm for non-SIE exams.  While the Proposal may be welcomed by many, others fear the multiplication of examinations, and are concerned that the Proposal maintains the basic concept that other that the SIE, registration is associated with a firm rather than solely an individual.