Licenses & CE

After passing the appropriate licensing exams, filing the U-4, and FINRA confirming registration as effective, a person is considered a registered representative. This chapter covers the requirements to maintain effective registration over time and when FINRA licenses lapse.

Continuing education

Registered representatives must attend continuing education (CE) annually to maintain proper knowledge of financial laws and regulations. Good news - there’s no need to study! CE typically involves going through 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. Representatives may complete CE on most internet-connected devices through FINRA’s Financial Professional Gateway (FinPro). FINRA creates Regulatory Element CE based on what it considers essential to cover (e.g., recent unethical actions witnessed, relevant rule changes) and periodically updates the content.

Registered representatives must complete Regulatory Element CE annually. If not completed on time, the representative’s registration is placed in an inactive state, resulting in the inability to perform registered representative actions. Until CE is completed, the person is essentially considered unregistered.

Firm Element CE is administered and facilitated by FINRA member firms (brokerage and investment firms registered with FINRA; your employer). This type of CE is more focused on ethics and prohibited actions related to the specific products and services offered by the representatives. In FINRA’s own 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 goes inactive when they leave the industry. If the person re-associates with another firm within a few years, all licenses remain intact and become active again once effective registration is gained (after filing the new U-4). However, a person’s licenses (e.g., Series 7 license) begin lapsing if 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 (the only securities exam with this lapse period). Additionally, firms cannot “park” licenses of former employees. “Parking” occurs when a firm maintains an individual’s license as active, although the firm no longer employs them. When an individual leaves the firm, the countdown begins!

In 2022, FINRA introduced the Maintaining Qualifications Program (MQP), which allows previously registered individuals that have been terminated (quit, resigned, fired) to maintain their licenses for up to five years after termination. Specific rules must be followed to qualify:

• 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 exist for FINRA’s MQP. First, individuals that only passed the SIE exam are not eligible - a top-off exam like the Series 6 or 7 must be included. However, the SIE can be included once another FINRA exam is passed. Second, NASAA exams (Series 63, 65, and 66) are not eligible. Therefore, these state-based exams are always subject to a two-year lapse period.