Registration & Conduct
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Terms in this set
- Securities Act of 1933 The 'truth in securities' law governing the PRIMARY market: new issues must be registered with the SEC and sold with a prospectus containing full and fair disclosure, with liability for misstatements.
- Securities Exchange Act of 1934 The law governing the SECONDARY market: it created the SEC, requires broker-dealers and exchanges to register, empowers the Fed to set margin (Reg T), and contains the antifraud and antimanipulation provisions.
- Forms U4 & U5 Form U4 registers an individual with FINRA through a member firm — disclosing employment history, residences, and disciplinary events; Form U5 reports the termination of that registration within 30 days, with a copy to the rep.
- Statutory Disqualification Conditions that bar a person from associating with a member firm: any felony conviction or securities/money-related misdemeanor within the past 10 years, plus certain regulatory bars, expulsions, and false statements on registration forms.
- Continuing Education (CE) Two ongoing requirements for registered persons: the Regulatory Element — FINRA-prescribed training completed annually by December 31 — and the Firm Element, the firm's own annual training program for covered persons.
- Outside Business Activities (OBA) Any business activity outside the member firm for which a rep receives or expects compensation — a second job, directorship, or side business — requiring PRIOR WRITTEN NOTICE to the firm before participating.
- Private Securities Transactions Securities transactions a rep effects OUTSIDE the scope of their firm — 'selling away.' The rep must give prior written notice; if compensated, the firm must give written APPROVAL and supervise the trades on its books.
- Gifts & Gratuities FINRA caps gifts from a member or rep to employees of other firms at $300 per person per year (raised from $100 effective March 30, 2026) where the gift relates to the recipient's employer's business; business entertainment the giver attends is separate and must be reasonable, not conditioned on business.