Skip to Content
Notice

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Revisions to the Series 62 Examination Program

 

Table of Contents Back to Top

December 31, 2007.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder, [2] notice is hereby given that on December 12, 2007, Financial Industry Regulatory Authority, Inc. (“FINRA”) (f/k/a National Association of Securities Dealers, Inc. (“NASD”)) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared substantially by FINRA. FINRA has designated this proposal as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to section 19(b)(3)(A)(i) of the Act [3] and Rule 19b-4(f)(1) thereunder, [4] which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Back to Top

FINRA is filing revisions to the study outline and selection specifications for the Limited Representative—Corporate Securities (Series 62) examination program. [5] The proposed revisions update the material to reflect changes to the laws, rules and regulations covered by the examination and to better reflect the duties and responsibilities of a Limited Representative—Corporate Securities. FINRA is not proposing any textual changes to the By-Laws, Schedules to the By-Laws, or Rules of FINRA.

The text of the proposed rule change is available at www.finra.org, the principal offices of FINRA, and the Commission's Public Reference Room. The Series 62 selection specifications have been submitted to the Commission under separate cover with a request for confidential treatment pursuant to Rule 24b-2 under the Act. [6]

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Back to Top

In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

Section 15A(g)(3) of the Act [7] requires FINRA to prescribe standards of training, experience, and competence for persons associated with FINRA members. In accordance with that provision, FINRA has developed examinations, and administers examinations developed by other self-regulatory organizations, that are designed to establish that persons associated with FINRA members have attained specified levels of competence and knowledge. FINRA periodically reviews the content of the examinations to determine whether revisions are necessary or appropriate in view of changes pertaining to the subject matter covered by the examinations.

Pursuant to NASD Rule 1032(e), each associated person of a member who is included within the definition of representative in NASD Rule 1031(b) may register with FINRA as a Limited Representative—Corporate Securities if: (1) The individual's activities in the investment banking and securities business of the member are limited solely to the solicitation, purchase and sale of a “security,” as that term is defined in section 3(a)(10) of the Act; (2) the individual does not engage in any activities relating to the following securities: Municipal securities as defined in section 3(a)(29) of the Act; option securities as defined in NASD Rule 2860; redeemable securities of companies registered pursuant to the Investment Company Act of 1940 (except for money market funds); variable contracts of insurance companies registered pursuant to the Securities Act of 1933; and direct participation program securities as defined in NASD Rule 1022(e); and (3) the individual passes the Series 62 qualification examination.

A committee of industry representatives, together with FINRA staff, recently undertook a review of the Series 62 examination program. As a result of this review, FINRA is proposing to make revisions to the study outline to reflect changes to the laws, rules, and regulations covered by the examination and to better reflect the duties and responsibilities of a Limited Representative—Corporate Securities.

Among other revisions, FINRA is proposing to revise the references to the FINRA and The NASDAQ Stock Market LLC (“NASDAQ”) rules in the study outline to reflect NASDAQ's separation from FINRA (then known as NASD). In addition, FINRA is proposing to add sections on exchange-traded funds, hedge funds, unit investment trusts, SEC Regulation M-A (Mergers and Acquisitions), SEC Regulation S-K, SEC Regulation S-X, SEC Regulation NMS, SEC Regulation SHO and SEC Rule 405 (Definitions of Terms). FINRA also is proposing to add sections on NASD IM-2110-7 (Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes), IM-2440-2 (Additional Mark-Up Policy For Transactions in Debt Securities, Except Municipal Securities) and IM-2210-6 (Requirements for the Use of Investment Analysis Tools), as well as on NASD Rules 2111 (Trading Ahead of Customer Market Orders), 2370 (Borrowing From or Lending to Customers) and 2441 (Net Transactions with Customers).

FINRA is proposing to change the title of section 1 of the study outline from “Characteristics of Corporate Securities” to “Types and Characteristics of Securities and Investments,” the title of section 3 from “Valuing Corporate Securities” to “Evaluation of Securities and Investments,” and the title of section 4 from “Handling Customer Accounts” to “Handling Customer Accounts and Securities Industry Regulations.” Further, as a result of the revisions discussed above, the number of questions on each section of the study outline was modified as follows: Types and Characteristics of Securities and Investments, decreased from 28 to 25 questions; The Market for Corporate Securities, increased from 31 to 40 questions; Evaluation of Securities and Investments, no changes to the number of questions (remains at 14 questions); and Handling Customer Accounts and Securities Industry Regulations, decreased from 42 to 36 questions.

FINRA is proposing similar changes to the Series 62 selection specifications and question bank. The number of questions on the Series 62 examination will remain at 115, and candidates will continue to have 21/2hours to complete the exam. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions to receive a passing grade.

2. Statutory Basis

FINRA believes that the proposed revisions to the Series 62 examination program are consistent with the provisions of sections 15A(b)(6) [8] and 15A(g)(3) of the Act, [9] which authorize FINRA to prescribe standards of training, experience, and competence for persons associated with FINRA members.

B. Self-Regulatory Organization's Statement on Burden on Competition

FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Back to Top

The proposed rule change has become effective pursuant to section 19(b)(3)(A)(i) of the Act [10] and Rule 19b-4(f)(1) thereunder, [11] in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. FINRA proposes to implement the revised Series 62 examination program on February 12, 2008. FINRA will announce the implementation date in a Regulatory Notice to be published on December 12, 2007, the date FINRA filed SR-FINRA-2007-31 with the Commission.

At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments Back to Top

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

  • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2007-031. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR-FINRA-2007-031 and should be submitted on or before January 29,2008.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [12]

Florence E. Harmon,

Deputy Secretary.

[FR Doc. E8-94 Filed 1-7-08; 8:45 am]

BILLING CODE 8011-01-P

Footnotes Back to Top

5. FINRA also is proposing corresponding revisions to the Series 62 question bank, but based upon instruction from the Commission staff, FINRA is submitting SR-FINRA-2007-031 for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(1) thereunder, and is not filing the question bank for Commission review. See Letter to Alden S. Adkins, Senior Vice President and General Counsel, NASD Regulation, from Belinda Blaine, Associate Director, Division of Market Regulation, SEC, dated July 24, 2000, attached as Exhibit 3c to the proposed rule change. The question bank is available for Commission review.

Back to Context
Site Feedback