Study for the Series 6 Exam

  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...

   Thinking of taking the Series 6 Exam? Then make sure that you study the characteristics of Private Placements and Private Offerings because you are likely to see questions about these topics on the Series 6 Exam. How do I know this? FINRA list these topics In its Content Outline for the Series 6 Exam in Section 1.2, entitled "Describe Investment Products and Services . . . " Bob Eder in his Series 6 study guide,  Study for the  Series 6  Exam , discusses Private Placements and Offerings in detail. Here is a sample of Bob Eder's discussion: Rule 506 Under Rule 506 of Reg. D, there is no dollar limit on the size of the private offering. Moreover, there may not be more than 35 investors. In addition, Reg. D allows an unlimited number of accredited investors, generally those with sizeable assets or income. In a Rule 506 offering, all purchasers, accredited or non-accredited, must be knowledgeable and sophisticated investors, meaning that they are both famili...

  The Series 6 Exam tests candidates on privacy rules that registered reps must observe for maintaining the confidentiality of financial information and financial status of customers. How do we know this? FINRA publishes a   Content Outline   for the Series 6 Exam, and Section 2.2 of the Content Outline lists the Privacy Requirements and Regulation S-P as important for the Series 6 Exam. Bob Eder in his Series 6 guide,  Study for the Series 6 Exam , discusses privacy requirements in detail. Here is a sample of Bob Eder's discussion: Regulation S-P The SEC has adopted Regulation S-P to assure that broker/dealers and investment advisory firms, as well as other firms that collect sensitive financial information of customers, comply with the law on safeguarding the privacy of personal non-public financial information. The notice must be easy to understand, conspicuous, not camouflaged in small type or font. It must be sent to all persons with whom a financial firm initia...

FINRA publishes a Content Outline for the Series 6 Exam. Under Function 1 - "Seeks Business for the Broker Dealer from Customers and Potential Customers," FINRA's Content Outline lists required knowledge of the standards and required approvals for Public Communications. The primary FINRA rule governing Communications with the Public is Rule 2210. Before you sit for the Series 6 Exam, make sure that you are familiar with the main provisions of this Rule. Bob Eder has a full treatment of Rule 2210  Communications with the Public  in his Study for the Series 6 Exam . Here is an example of Bob Eder's treatment: Correspondence (1.1) FINRA defines "correspondence" as any written or electronic communication that a brokerage firm or representative sends, distributes, or makes available to 25 or fewer retail investors, within any 30-calendar-day period. If a representative sends material to more than 25 retail customers within any 30-day period, then it would be ...

What is the "Best Execution Rule"? Can you define and describe the Rule?  The Series 6 Exam may ask you questions about the  Best Execution Rule , so be prepared. FINRA publishes a Content Outline for the Series 6 Exam , and it lists the " Best Execution Rule " in Section 4.1. It also refers to FINRA Rule 5310 that governs both the Best Execution Rule and Interpositioning. Bob Eder in his Study for the Series 6 Exam discusses the Best Execution Rule on page 266 and Interpositioning on page 289. Here is a sample of Bob Eder's treatment: Best Execution Rule (4.1) When a client gives an order to buy or sell securities, a broker or representative has an obligation to make sure that the client pays the lowest price available, if the client is buying, or receives the highest price available, if selling. This is called "best execution." Especially in the Nasdaq market, there might be five, 10, or 15 dealers taking the other side who will buy or sell. The p...

FINRA publishes a Content Outline for the Series 6 Exam that lists the subject matter for test questions. Included are Privacy Regulations regarding financial information received from customers and clients. See Section 2.2 of FINRA's Content Outline. Thus a representative must not disclose details about a customer's account or financial position or history. This information is confidential and may not be disclosed, absent a court order. Candidates for the Series 6 license must prepare themselves to answer questions about Privacy Regulations, including when a customer may opt out from allowing a brokerage firm to share confidential customer information with related affiliates. Bob Eder covers Privacy Regulations in detail in his Study for the Series 6 Exam . Here is a sample of Bob Eder's treatment: "Safeguarding Privacy of Customers                                          ...