After you pass the appropriate licensing exams, file the U-4, and FINRA confirms your registration is effective, you’re considered a registered representative. This chapter explains how to keep that registration effective over time and what happens when FINRA licenses lapse.
Continuing education Registered representatives must complete continuing education (CE) each year to stay current on financial laws and regulations. CE is typically a set of scenario-based modules focused on ethical obligations, regulations, and prohibited actions.
There are two types of continuing education:
Regulatory Element
Firm Element
Regulatory Element CE is administered and facilitated by FINRA. You can complete it on most internet-connected devices through FINRA’s Financial Professional Gateway (FinPro). FINRA designs the Regulatory Element based on topics it considers essential (for example, recent unethical conduct it has observed and relevant rule changes) and updates the content periodically.
Sidenote
FinPro FINRA’s Financial Professional Gateway (FinPro) gives individuals and firms access to tools for managing registration status. In particular, FinPro allows or facilitates the following:
Access to CRD information
Scheduling of qualification exams (e.g., SIE exam) Enrollment in the Maintaining Qualifications Program (MQP) (discussed below)
Taking required Regulatory Element CE
Review and downloading of Form U-5
Registered representatives must complete Regulatory Element CE annually. If it isn’t completed by the deadline, the representative’s registration becomes inactive, and they can’t perform registered representative functions. Until CE is completed, the person is treated as unregistered.
Sidenote
Unregistered persons FINRA draws a clear line regarding what an unregistered person can do. Many entry-level employees start in clerical (administrative) roles until they pass their exams and obtain effective registration. According to the relevant FINRA notice, these are the specific actions an unregistered person may perform:
Set meetings with registered representatives
Extend invitations to events where securities will be discussed Ask prospective clients* if they want to speak to a registered representative
Ask prospective clients if they want investment literature
*A prospective client is a potential client the firm or person is attempting to begin a relationship with or sell products/services to. FINRA doesn’t explicitly state it, but unregistered persons may also provide account and general market information. This includes account balances, transaction history, quotes on securities (e.g., quoting the current market price of a stock), and market data (e.g. S&P 500 level). FINRA also outlines prohibited activities that unregistered persons may not take part in, including:
Discussing specific investment products or services
Pre-qualifying prospective clients for suitability*
Soliciting new accounts to be opened
Soliciting orders to be placed
*Pre-qualifying for suitability means asking questions regarding a client’s financial background, investment objectives, or goals to make suitable investment recommendations.
Firm Element CE is administered and facilitated by FINRA member firms (brokerage and investment firms registered with FINRA - typically your employer). This CE focuses on ethics and prohibited actions as they relate to the specific products and services the firm offers. In FINRA’s words:
[CE] training must cover topics related to professional responsibility and to the role, activities, or responsibilities of the registered person.
Member firms are required to facilitate Firm Element CE annually.
Lapsing licenses A representative’s license becomes inactive when they leave the industry. If the person re-associates with another firm within a few years, their licenses generally remain intact and become active again once effective registration is obtained (after filing the new U-4). However, licenses begin to lapse if the person stays out of the industry for longer periods. Specifically, any NASAA exam (e.g., Series 63) or FINRA exam other than the SIE lapses after two years. The SIE exam lapses after four years (it’s the only securities exam with this lapse period). In addition, firms can’t “park” licenses for former employees. “Parking” is when a firm keeps an individual’s license active even though the firm no longer employs them. Once an individual leaves the firm, the lapse countdown begins. In 2022, FINRA introduced the Maintaining Qualifications Program (MQP). MQP allows previously registered individuals who have been terminated (quit, resigned, fired) to maintain their licenses for up to five years after termination. To qualify, specific rules must be followed:
Must be registered for at least one year before termination
Must elect to participate within two years of termination
Regulatory Element CE must be completed by due dates*
*CE is required annually, but what if a person waits until their two year termination date? Good news - they can still participate. FINRA illustrates how it would work in the following scenario. For example, if your registrations were terminated on August 15, 2022, and you enrolled in the MQP on August 19, 2022, your MQP learning plan due date will be August 15, 2024, which is two years from your termination date. In this scenario, you have until August 15, 2024, to complete your learning plan; however, if you do not complete your annual learning plan requirement by December 31 of each year and wait until August 15, 2024, you will be required to complete your 2022 and 2023 learning plan by August 15, 2024, and will then be required to complete your 2024 learning plan by December 31, 2024. Two notable exceptions apply to FINRA’s MQP. First, individuals who have only passed the SIE exam aren’t eligible - MQP requires a top-off exam such as the Series 6 or Series 7. (Once another FINRA exam is passed, the SIE can be included.) Second, NASAA exams (Series 63, 65, and 66) aren’t eligible. As a result, these state-based exams are always subject to a two-year lapse period.
Key points
Regulatory Element CE
Facilitated by FINRA
Educates and tests the rep’s understanding of ethics and compliance
Must be completed annually If not completed on time, the rep’s registration becomes inactive
Firm Element CE
Facilitated by member firms
Educates and tests the rep’s understanding of ethics and compliance
Specifically focuses on the firm’s products and services
Must be completed annually
FINRA’s Financial Professional Gateway (FinPro)
Online registration resource platform, which allows:
Access to CRD information
Scheduling of qualification exams
Enrollment in the Maintaining Qualifications Program (MQP)
Taking required Regulatory Element CE
Review and downloading of Form U-5
Financial license lapse
Occurs if out of the industry for more than 2 years (most licenses)
SIE exam license lapses after 4 years out of the industry
Maintaining Qualifications Program (MQP)
Extends lapse period on FINRA licenses to 5 years
Requirements:
Must be registered for at least one year before termination
Must participate within two years of termination
CE must be completed by due dates
After you pass the appropriate licensing exams, file the U-4, and FINRA confirms your registration is effective, you’re considered a registered representative. This chapter explains how to keep that registration effective over time and what happens when FINRA licenses lapse.