Study for the Series 6 Exam

  The Series 6 Exam covers SEC Rules including Regulation S-P on the privacy of consumer financial information and the safeguarding of customers' personal information. FINRA specifically lists Regulation S-P in its Series 6 Content Outline in Section 2.2. Recently the SEC has amended Regulation S-P "to  address the expanded use of technology and corresponding risks that have emerged since the Commission originally adopted Regulation S-P in 2000."  The amendments cover situations where computer hackers unlawfully view, copy or steal  a firm's customer accounts records . Brokerage and advisory firms, including mutual fund firms, are required to detail steps in writing to be taken when a brokerage firm suffers such a break-in. Firms must also report such events to the SEC as soon as possible, but no later than 30 days of occurrence. Furthermore, firms must notify customers whose accounts are, or reasonably likely to be, among those breached or stolen. Here's how the ...

One of the common misunderstandings of "living trusts" is that a person who sets up the trust, i.e., the "grantor," obtains sizeable and valuable tax benefits. This is not correct. The purpose of setting up a living or "revocable trust" is to provide an easier way to transfer assets to beneficiaries upon the death of the grantor, not to obtain tax benefits either for the grantor or for the beneficiaries. The subject of Trusts is contained in the Series 6 Content Outline published by FINRA, indicating that questions on living trusts are contained on the Series 6 exam. (See FINRA Series 6 Content Outline Section 2.2.) Bob Eder discusses Trusts and Estates in his Study for the Series 6 Exam . Here is a sample of Bob Eder's treatment of Living Trusts: Trust Accounts                                         ...

Several blogs ago, I discussed RILA's, or Registered Index-Linked Annuities. FINRA's Series 6 Content Outline lists Annuities under Section 3.2, meaning that the Series 6 Exam covers these alternative investments and asks questions about them. Today on the SEC website, I see that the SEC is paying close attention to the complex structure and details of RILA's in its   SEC OIAD Report on Activities—Fiscal Year 2023 . Here is just one paragraph from this SEC publication in regard to RILA's. I intend to present more segments in future blogs from this SEC Report on RILA's. " REGISTERED INDEX-LINKED ANNUITIES (RILAs)  "What Are RILA's and How Do They Work?  "RILA's are tax-deferred retirement savings vehicles that advertise potentially reduced market risk relative to investing directly in financial markets. Like many other retirement savings vehicles, money is first added to the overall vehicle and then the investor allocates that money to specific...

The Series 6 requires knowledge of employee stock options, both qualified and non-qualified. How do I know this? FINRA publishes a Series 6 Content Outline that lists all the areas covered by the Series 6 Exam, and it lists Employer-Sponsored Plans and Stock Options as Required Knowledge in Section 2.1. Therefore, before sitting for the Series 6 Exam, make sure that you have studied and understand these stock options. Bob Eder in his  Study for the Series 6 Exam has a full treatment of the differences between qualified options, called incentive stock options (ISO), and non-qualified stock options (NQSO). Here is a sample of Bob Eder's discussion: Incentive Stock Options (ISO)                                      (2.1) A recipient of incentive stock options (ISO) must be an employee of the granting cor...

  If you plan to sit for the Series 6 Exam, know in advance that the Series 6 contains questions on Capital Market Theory and Capital Asset Pricing Model (CAPM). How do I know this? I know it because FINRA Series 6 Content Outline clearly indicates in Section 3.1 that there are possible questions that ask about portfolio theories, such as Capital Market Theory, Capital Asset Pricing Model, Modern Portfolio Theory, and Efficient Market Hypothesis. Bob Eder in his  Study for the Series 6 Exam  discusses Capital Market Theory and Capital Asset Pricing Model (CAPM) in detail. Here is an example of Bob Eder's treatment: Capital Market Theory                                                                ...

Picture yourself CCO (Chief Compliance Officer) of ABC Advisory Firm. One of your I.A. representatives makes use of her personal smart phone to stay in contact with clients by texting, as she finds it easier to communicate in writing on her personal phone when she is out of the office. Does the SEC's Rule on Keeping Written Records of Client Communications include such electronic written messages or SMS if they are sent via personal computers, cell phones, et al? The answer is emphatically yes! The Record Keeping Rule applies, even though the rep or registered associate uses his or her own electronic device or smart phone to send the written communication or message. The SEC recently brought charges against Scotia Capital and HBSC for widespread record-keeping failures, attributed to permitting associates to send written communications via their personal devices. (See SEC Press Release 2023-91.) Here's what the SEC said in this case: "The SEC’s investigation of HSBC Securi...

Plan on taking the Series 6 exam? If so, make sure that you study and know the rules on customer screening and the customer identification program. FINRA's Content Outline requires knowledge of customer screening and the customer identification program in Section 2.2. Bob Eder presents a detailed treatment of customer screening in his Series 6 manual, Study for the Series 6 Exam , on pages 91-94. Here is a sample of Bob Eder's discussion: "Customer Identification Program (CIP) (2.2) As required by the USA Patriot Act, the SEC and the U.S. Treasury have adopted rules requiring that broker/dealers establish and operate a "customer identification program," or CIP. "Verification of Customer Information (2.2) A broker/dealer must verify the accuracy of the information given by the customer. This can be done in one of two ways: either by checking documents or by non-documentary means." Here is the  link to FINRA's Content Outline for the Series ...