Bob Eder's Blog: STUDY FOR YOUR SECURITIES EXAMS - Posts Tagged "pass-your-series-6-exam"
SERIES 6 EXAM REQUIRES KNOWLEDGE OF REGULATION D AND PRIVATE PLACEMENTS, SO BE CAREFUL TO STUDY REG D!
Planning to take the Series 6 exam to qualify as a FINRA-registered representative able to sell investment companies and variable products? Then make sure you study the provisions of SEC Regulation D which governs the offerings of private placements. Oh? You didn't think that the Series 6 would include questions on private placements? Then read on . . .
Section 1.2 of FINRA's Content Outline for the Series 6 includes a chunk on the provisions of Regulation D. This regulation sets forth conditions under which an issuer may offer a new issue privately, i.e., without making an offering available to the general public. Regulation D consists of nine sub-rules, 500 through 508, that establish conditions and definitions.
Rule 506 is especially important because it lists the conditions for an unlimited amount of securities to be offered. It allows only a limited number of unaccredited investors, but does allow accredited investors to be unlimited in number.
Therefore, Series 6 applicants, make sure you can define who is an accredited investor and who is not. Know the number limit on unaccredited investors. Know what Regulation D allows and what it prohibits.
You can see why the Series 6 can pose problems for those taking it, especially if they go into the exam unprepared on the above.
Be cautious on which Series 6 texts or study books you choose. Make sure that they cover the items in FINRA's Content Outline, including private placements.
For your assistance, Bob Eder's book places the numbered sections of FINRA's Content Outline next to major paragraphs.
Bob Eder's study text, Study for the Series 6 Exam, explains Regulation D and private placements, including practice questions.
Bob Eder's book, Study for the Series 6 Exam, is available from Amazon in either paperback or e-book versions.
Here is the link to Study for the Series 6 Exam on Amazon.
Here is the link to FINRA's Content Outline. Take note of Section 1.2, dealing with Regulation D and private placements.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
P.S. Bob Eder very much appreciates reviews of readers. Please review Study for the Series 6 Exam. Your opinion matters!
Section 1.2 of FINRA's Content Outline for the Series 6 includes a chunk on the provisions of Regulation D. This regulation sets forth conditions under which an issuer may offer a new issue privately, i.e., without making an offering available to the general public. Regulation D consists of nine sub-rules, 500 through 508, that establish conditions and definitions.
Rule 506 is especially important because it lists the conditions for an unlimited amount of securities to be offered. It allows only a limited number of unaccredited investors, but does allow accredited investors to be unlimited in number.
Therefore, Series 6 applicants, make sure you can define who is an accredited investor and who is not. Know the number limit on unaccredited investors. Know what Regulation D allows and what it prohibits.
You can see why the Series 6 can pose problems for those taking it, especially if they go into the exam unprepared on the above.
Be cautious on which Series 6 texts or study books you choose. Make sure that they cover the items in FINRA's Content Outline, including private placements.
For your assistance, Bob Eder's book places the numbered sections of FINRA's Content Outline next to major paragraphs.
Bob Eder's study text, Study for the Series 6 Exam, explains Regulation D and private placements, including practice questions.
Bob Eder's book, Study for the Series 6 Exam, is available from Amazon in either paperback or e-book versions.
Here is the link to Study for the Series 6 Exam on Amazon.
Here is the link to FINRA's Content Outline. Take note of Section 1.2, dealing with Regulation D and private placements.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
P.S. Bob Eder very much appreciates reviews of readers. Please review Study for the Series 6 Exam. Your opinion matters!
SERIES 6 EXAM INCLUDES QUESTIONS ABOUT LIVING TRUSTS AND NECESSARY DOCUMENTS TO OPEN TRUST ACCOUNTS
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 (2.2)
One of the most common trusts that is fairly easy to set up is the living trust. An owner of assets or mutual funds sets up a trust, then puts shares of mutual funds into the trust to fund it. The assets remain the property of the person who sets it up (i.e., the "grantor"), regardless of who is named as the beneficiary. Only upon the death of the grantor do the assets in the trust pass to the beneficiaries. Note that during the life of the grantor, income taxes still are assessed against him or her. A living trust is not a device to escape paying taxes on the income or dividends accruing in the trust. Why, then, if there are no tax benefits, set up a living trust? It allows assets owned by the grantor to be easily passed to the beneficiaries without first being tied up in probate proceedings in court.
Study for the Series 6 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Study for the Series 6 Exam on Amazon.
See Bob Eder's Author Page on Amazon.com.
See Bob Eder's Author's Page on Goodreads.
For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, or about Trusts and Estates, simply email Bob Eder at bobeder@bobeder.net.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
Please consider reviewing Bob Eder's Study for the Series 6 Exam on both Amazon and Goodreads. Your review is important!
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 (2.2)
One of the most common trusts that is fairly easy to set up is the living trust. An owner of assets or mutual funds sets up a trust, then puts shares of mutual funds into the trust to fund it. The assets remain the property of the person who sets it up (i.e., the "grantor"), regardless of who is named as the beneficiary. Only upon the death of the grantor do the assets in the trust pass to the beneficiaries. Note that during the life of the grantor, income taxes still are assessed against him or her. A living trust is not a device to escape paying taxes on the income or dividends accruing in the trust. Why, then, if there are no tax benefits, set up a living trust? It allows assets owned by the grantor to be easily passed to the beneficiaries without first being tied up in probate proceedings in court.
Study for the Series 6 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Study for the Series 6 Exam on Amazon.
See Bob Eder's Author Page on Amazon.com.
See Bob Eder's Author's Page on Goodreads.
For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, or about Trusts and Estates, simply email Bob Eder at bobeder@bobeder.net.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
Please consider reviewing Bob Eder's Study for the Series 6 Exam on both Amazon and Goodreads. Your review is important!
SERIES 6 EXAM ASKS QUESTIONS ABOUT COMMUNICATIONS WITH CUSTOMERS AND KEEPING WRITTEN RECORDS OF THOSE COMMUNICATIONS
February 18, 2024
Series 6 Exam candidates should expect that several Series 6 Exam questions deal with FINRA and SEC rules on proper communications with retail customers and keeping written records of such communications. The Record-Keeping Rules state that a brokerage firm has an obligation to keep written records of advertising material sent to customers by its registered reps. Such records must be in writing or electronic form, and be signed and dated by a registered principal of the broker/dealer.
But many reps do not know that the brokerage firm is also bound to keep records of all communications, even those that are sent or received through social media, such as Facebook, Twitter, et al.
Yes, the Record-Keeping Rule covers communications with customers through social media, e-mail, digital messaging, and all other website and internet platforms. (These communications are known as "off channel.")
That this is an important topic on the Series 6 Exam is underscored by an SEC Press Release dated February 9, 2024, announcing that the SEC has discovered serious violations of the Record-Keeping Rule by 16 firms, and listing the names of the firms which the SEC has fined more than $81 million in total.
Here's what the SEC stated about these 16 firms:
"The SEC’s investigations uncovered pervasive and longstanding uses of unapproved communication methods, known as off-channel communications, at all 16 firms. As described in the SEC’s orders, the broker-dealer firms admitted that, from at least 2019 or 2020, their employees communicated through personal text messages about the business of their employers. The investment adviser firms admitted that their employees sent and received off-channel communications related to recommendations made or proposed to be made and advice given or proposed to be given. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws. By failing to maintain and preserve required records, some of the firms likely deprived the SEC of these off-channel communications in various SEC investigations. The failures involved employees at multiple levels of authority, including supervisors and senior managers."
https://www.sec.gov/news/press-releas...
In this Press Release, the SEC is stating that the penalized firms allowed their registered reps and I.A. reps to use digital means and/or social media to contact and communicate with their clients, yet the firms kept no written records of the nature of these communications, what was said, or how it was presented.
Bob Eder devotes Chapter One of his Study for the Series 6 Exam to Communications with retail customers and discusses the obligations of the Record-Keeping Rules throughout the text.
Study for the Series 6 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Study for the Series 6 Exam on Amazon.
See Bob Eder's Author Page on Amazon.com.
See Bob Eder's Author's Page on Goodreads.
For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, or about the Record-Keeping Rules, simply email Bob Eder at bobeder@bobeder.net.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
Please consider reviewing Bob Eder's Study for the Series 6 Exam on both Amazon and Goodreads. Your review is important!
Series 6 Exam candidates should expect that several Series 6 Exam questions deal with FINRA and SEC rules on proper communications with retail customers and keeping written records of such communications. The Record-Keeping Rules state that a brokerage firm has an obligation to keep written records of advertising material sent to customers by its registered reps. Such records must be in writing or electronic form, and be signed and dated by a registered principal of the broker/dealer.
But many reps do not know that the brokerage firm is also bound to keep records of all communications, even those that are sent or received through social media, such as Facebook, Twitter, et al.
Yes, the Record-Keeping Rule covers communications with customers through social media, e-mail, digital messaging, and all other website and internet platforms. (These communications are known as "off channel.")
That this is an important topic on the Series 6 Exam is underscored by an SEC Press Release dated February 9, 2024, announcing that the SEC has discovered serious violations of the Record-Keeping Rule by 16 firms, and listing the names of the firms which the SEC has fined more than $81 million in total.
Here's what the SEC stated about these 16 firms:
"The SEC’s investigations uncovered pervasive and longstanding uses of unapproved communication methods, known as off-channel communications, at all 16 firms. As described in the SEC’s orders, the broker-dealer firms admitted that, from at least 2019 or 2020, their employees communicated through personal text messages about the business of their employers. The investment adviser firms admitted that their employees sent and received off-channel communications related to recommendations made or proposed to be made and advice given or proposed to be given. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws. By failing to maintain and preserve required records, some of the firms likely deprived the SEC of these off-channel communications in various SEC investigations. The failures involved employees at multiple levels of authority, including supervisors and senior managers."
https://www.sec.gov/news/press-releas...
In this Press Release, the SEC is stating that the penalized firms allowed their registered reps and I.A. reps to use digital means and/or social media to contact and communicate with their clients, yet the firms kept no written records of the nature of these communications, what was said, or how it was presented.
Bob Eder devotes Chapter One of his Study for the Series 6 Exam to Communications with retail customers and discusses the obligations of the Record-Keeping Rules throughout the text.
Study for the Series 6 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Study for the Series 6 Exam on Amazon.
See Bob Eder's Author Page on Amazon.com.
See Bob Eder's Author's Page on Goodreads.
For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, or about the Record-Keeping Rules, simply email Bob Eder at bobeder@bobeder.net.
Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.
Please consider reviewing Bob Eder's Study for the Series 6 Exam on both Amazon and Goodreads. Your review is important!
