15.2 Agent Registration

Agent Registration Requirements

Agents are individuals who represent broker-dealers or issuers in securities transactions. Understanding agent registration requirements is essential for the Series 65 exam.

Definition of Agent

An agent is any individual (other than a broker-dealer itself) who represents a broker-dealer or issuer in:

Effecting purchases or sales of securities.

Attempting to effect purchases or sales of securities.

Key Points

Must Be Individual: Agents are natural persons, not firms.

Representative Relationship: Acts on behalf of BD or issuer.

Transaction-Related: Involved in effecting or attempting securities transactions.

Also Called: Registered Representative, stockbroker.

Who Is NOT an Agent

Exclusions from Agent Definition

Clerical/Administrative Staff: No securities sales activities.

Issuer Representatives (Exempt Transactions): Certain transactions don't require registration.

Non-Compensated Officers/Directors: Not compensated for selling securities.

Persons in Non-Sales Roles: Operations, compliance (non-customer facing).

Issuer Transactions NOT Requiring Agent Registration

Representatives of issuers are NOT agents when effecting:

Employee Benefit Plans: Sales to employees under qualified plans.

Isolated Non-Issuer Transactions: Occasional, not part of regular business.

Institutional Transactions: Sales to banks, insurance companies, etc.

Existing Security Holder Transactions: Stock dividends, rights offerings.

State Registration Requirements

Registration Process

1. Association: Must be associated with registered broker-dealer.

2. Form U4: File through Central Registration Depository (CRD).

3. Examinations: Pass required qualifying exams.

4. Background Check: Fingerprinting, criminal/regulatory history.

5. State Fees: Pay applicable registration fees.

6. Approval: Await state processing.

Form U4 Contents

Personal: Name, SSN, DOB, addresses (5 years).

Employment: History for past 10 years.

Education: Schools, degrees, certifications.

Disclosures: Criminal, regulatory, civil, financial, termination.

Fingerprints: Required in most states.

Qualification Examinations

Securities Industry Essentials (SIE)

Sponsor: No sponsor required, anyone 18+ can take.

Questions: 80 questions (75 scored, 5 pretest).

Time: 105 minutes.

Passing Score: 70 (a scaled score).

Cost: $100.

Validity: 4 years from passing.

Series 7 (General Securities Representative)

Corequisite: SIE (pass both, in either order).

Sponsor: Requires broker-dealer sponsorship.

Questions: 130 questions (125 scored, 5 pretest).

Time: 225 minutes (3 hours 45 minutes).

Passing Score: 72 (a scaled score).

Scope: Broadest representative license, most securities.

Series 6 (Investment Company/Variable Contracts)

Corequisite: SIE (pass both, in either order).

Sponsor: Requires broker-dealer sponsorship.

Questions: 50 scored questions.

Time: 90 minutes.

Passing Score: 70 (a scaled score).

Scope: Limited, mutual funds, variable annuities, variable life.

State Law Exams

Series 63: Uniform Securities Agent State Law.

Series 65: Investment Adviser Representative.

Series 66: Combined 63 + 65 content (SIE and Series 7 are corequisites).

Common Registration Combinations

General Securities Rep: SIE + Series 7 + Series 63.

Investment Company Rep: SIE + Series 6 + Series 63.

Investment Adviser Rep (only): Series 65.

Dual (Rep + IAR): SIE + Series 7 + Series 66.

On the Exam: The SIE can be taken without sponsorship and remains valid for 4 years. The Series 7 and Series 6 require broker-dealer sponsorship via Form U4.

Registration Maintenance

Effective Registration

BD Association Required: Registration only valid while associated with registered BD.

Termination: Registration terminates when association ends.

Transfer: Can transfer to new BD via Form U4.

Re-Registration: Must re-register with new firm.

Continuing Education (FINRA)

Regulatory Element: Annual computer-based training.

Firm Element: Firm-specific annual training.

Non-Compliance: Status becomes "CE Inactive".

Inactive Status: Cannot engage in securities activities.

Supervision Requirements

Broker-Dealer Obligations

Written Supervisory Procedures: Document supervision framework.

Designated Supervisors: Principals responsible for oversight.

Transaction Review: Monitor trading activity.

Communication Review: Review correspondence, emails, social media.

Training: Ongoing compliance education.

Red Flag Response: Investigate and address issues.

Principal Registration

Supervisors must be registered as principals:

General Securities Principal: Series 24.

Financial/Operations Principal: Series 27.

Investment Company Principal: Series 26.

Key Takeaways

1. Agents are individuals representing BDs in securities transactions.

2. Clerical staff and issuer reps in exempt transactions are not agents.

3. SIE requires no sponsor; Series 7/6 require BD sponsorship.

4. Agent registration is only valid while associated with a registered BD.

5. Supervisors must be registered principals (Series 24, 26, or 27).