FINRA Rules and Structure

As a Series 6 representative, you'll be directly subject to FINRA's rules. Understanding FINRA's structure and key rules is essential for your daily work and the exam.

What is FINRA?

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for securities firms operating in the United States. Key facts:

FINRA's mission is to protect investors by ensuring the securities industry operates fairly and honestly.

Broker-Dealer Registration

Before a firm can conduct securities business, it must register as a broker-dealer:

Registration Process

1. File Form BD — Submit through the Central Registration Depository (CRD)
2. SEC Review — SEC has 45 days to grant registration or begin denial proceedings
3. SRO Membership — Must become a FINRA member
4. SIPC Membership — Must join the Securities Investor Protection Corporation
5. State Registration — Register in states where business will be conducted

What is the CRD?

The Central Registration Depository (CRD) is the securities industry's centralized licensing and registration system. It maintains:

• Firm registration records
• Individual representative registrations
• Disclosure information (complaints, regulatory actions, etc.)
• Employment history

Individual Registration

To sell Series 6 products, you must be:

1. Associated with a FINRA member firm (sponsored)
2. Pass the SIE exam (Securities Industry Essentials)
3. Pass the Series 6 exam (top-off qualification)
4. Register through the CRD via Form U4

Form U4 (Uniform Application for Securities Industry Registration)

Form U4 is your registration application. It collects:

• Personal information
• Employment history (10 years)
• Residential history (5 years)
• Disclosure questions (criminal, regulatory, financial)

Important: You must update Form U4 within 30 days of any material changes, including changes in address, outside business activities, or disclosure events.

Form U5 (Uniform Termination Notice)

When you leave a firm, they file Form U5 within 30 days. This form:

• Terminates your registration with that firm
• Includes the reason for termination
• Remains part of your permanent CRD record

Key FINRA Rules for Series 6

FINRA Rule 2111 (Suitability)

Requires that recommendations be suitable based on:

• Reasonable-basis suitability — Understanding the product
• Customer-specific suitability — Matching to customer needs
• Quantitative suitability — Not excessive trading

FINRA Rule 2010 (Standards of Commercial Honor)

The "catch-all" ethics rule requiring members to observe "high standards of commercial honor and just and equitable principles of trade."

FINRA Rule 4512 (Customer Account Information)

Requires maintaining accurate customer account information, including:

• Customer name and residence
• Age or date of birth
• Employment status and occupation
• Investment objectives

FINRA Rule 3110 (Supervision)

Requires firms to establish and maintain written supervisory procedures and designate supervisory personnel.

BrokerCheck

BrokerCheck is FINRA's free tool allowing investors to research:

• Broker and firm registration status
• Employment history
• Disclosure events (complaints, regulatory actions, bankruptcies)

This promotes transparency and helps investors make informed decisions about who handles their investments.