Getting your Series 7 license is key requirement for many careers in the finance industry. And unlike the FINRA SIE exam, you must be sponsored by a FINRA (Financial Industry Regulatory Authority) member firm in order to register for and take the Series 7 exam. In this post, we’ll explain what sponsorship for Series 7 licensing means and how to get it. Let’s dig in.
If you haven’t heard of it before, “Sponsorship” just means that a firm is “sponsoring” your application to become a FINRA-registered member under their organization. Functionally, this means that an active, FINRA-regulated firm sends your personal information to FINRA’s Central Registration Depository (CRD), pays your exam fees, and will assume responsibility for your actions if you succeed in getting licensed.
After your firm sponsors you and registers you for the exam, you then have a testing window of 120 days to pass the exam without trying again and paying a new fee. After you pass the Series 7 exam, you can officially become a “Registered Representative” with FINRA and the sponsoring firm takes responsibility for monitoring and policing your activities in the securities industry.
To start the sponsorship process, you will need you or your sponsoring organization to fill out and submit FINRA’s Form U4. This is a 39-page form which asks for information about your personal, professional, and criminal background. Let’s go through it below.
Your sponsoring member firm will submit the completed form and filing fees to FINRA on your behalf. Before doing so, the firm has to run comprehensive background and public record checks to confirm the accuracy of the U4 and to check that there have been no omissions of public information or new items that would have to be disclosed. Work closely with your sponsoring member firm’s compliance department to ensure that all U4 information is correct, and do not lie or attempt to omit information.
In some circumstances, U4 disclosures could result in “statutory disqualification”, which will prevent you from becoming registered. Some examples of disqualifying events include: any felonies in the past 10 years; misdemeanors related to cash or securities; or past regulatory breaches. If these events are reported (and you should report them if they are true), your sponsoring firm can apply to FINRA to get a waiver to proceed with the registration. This can incur extra costs and additional supervisory procedures, but it is a path forward. Also, while you have to report bankruptcies and liens on the U4, these will not lead to statutory disqualification.
After filing the U4 form, you will need to get your fingerprint recorded and sent to FINRA within 30 days. These fingerprints are cross-checked against criminal databases for any possible misconduct or criminal history that could result in statutory disqualification. Work with your compliance team to learn more about how to do this.
The FINRA Securities Industry Essentials Exam (SIE) is a co-requisite for most securities registrations, including the Series 7. This means that you’ll have to take and pass your SIE eventually as part of the Series 7 registration process. But there’s a key difference that makes the SIE unique.
The SIE differs from other FINRA exams in that it does not require sponsorship. Some firms will prepare new candidates for the SIE as part of the hiring process, but for individuals who are not sponsored, studying for and passing the SIE independently can set you apart from other job candidates.
Attempting the SIE is also a great option for college students looking to land their first job in finance, career switchers that want to work in finance, or those that are working in finance but want to transition from a different function to a customer-facing role. Many also advise that you take the FINRA SIE ahead of preparing for the Series 7 because the FINRA SIE content is more entry-level, and is a good primer for what you’ll need to learn to pass the Series 7 exam.
You can sign up to take the SIE directly on FINRA’s website, you will just need to pay the $80 filing fee yourself. You do not need to file a Form U4 to take the FINRA SIE exam. Visit our blog post for a complete walkthrough of the process of taking the SIE exam.