Associated Person

The Exchange Act Definition

Under Section 3(a)(18) of the Securities Exchange Act of 1934, the term “person associated with a broker or dealer” or “associated person of a broker or dealer” means any partner, officer, director, or branch manager of such broker or dealer (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with such broker or dealer, or any employee of such broker or dealer, except that any person associated with a broker or dealer whose functions are solely clerical or ministerial shall not be included in the meaning of such term for purposes of Section 15(b) of the Act (other than paragraph (6) thereof).

The definition names three groups of persons and one exception. The first group is the partner, officer, director or branch manager of the broker or dealer, together with any person occupying a similar status or performing similar functions. The second group is any person directly or indirectly controlling, controlled by, or under common control with the broker or dealer. The third group is any employee of the broker or dealer.

Under Section 3(a)(9) of the Act, the term “person” means a natural person, company, government, or political subdivision, agency, or instrumentality of a government. The second group is written in terms of any person, which under that definition includes a company as well as a natural person. The control relationship runs in each direction: a person controlling the broker or dealer, a person controlled by it, and a person under common control with it all fall within the group.

The FINRA By-Laws Definition

In the By-Laws, the Corporation is the Financial Industry Regulatory Authority, Inc., the National Association of Securities Dealers, Inc. (NASD), or any future name of the entity, and the Rules of the Corporation are the numbered rules set forth in the Manual of the Corporation beginning with the Rule 0100 Series, as adopted by the FINRA Board pursuant to the FINRA By-Laws, as hereafter amended or supplemented. Under Article I, paragraph (r), “FINRA member” means any broker or dealer admitted to membership in FINRA, with a wider meaning for purposes of the Codes of Arbitration Procedure.

Under Article I, paragraph (ee), “person associated with a member” or “associated person of a member” means three things. The first is a natural person who is registered or has applied for registration under the Rules of the Corporation. The second is a sole proprietor, partner, officer, director, or branch manager of a member, or other natural person occupying a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member, whether or not any such person is registered or exempt from registration with FINRA under the By-Laws or the Rules of the Corporation. The third is, for purposes of Rule 8210, any other person listed in Schedule A of Form BD of a member.

A natural person who has applied for registration is within paragraph (ee)(1) in the same way as a natural person who is registered. Paragraph (ee)(2) reaches the persons it lists whether or not any such person is registered or exempt from registration with FINRA.

The Clerical or Ministerial Exception

The exception in Section 3(a)(18) removes a person whose functions are solely clerical or ministerial from the meaning of the term for purposes of Section 15(b) of the Act, other than paragraph (6). For purposes of paragraph (6), a person whose functions are solely clerical or ministerial is within the term.

Section 15(b)(6)(A) of the Act applies with respect to any person who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a broker or dealer, or any person participating, or, at the time of the alleged misconduct, who was participating, in an offering of any penny stock. Under that paragraph, the Securities and Exchange Commission (SEC), by order, shall censure, place limitations on the activities or functions of such person, or suspend for a period not exceeding twelve months, or bar any such person from being associated with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, if the SEC finds, on the record after notice and opportunity for a hearing, that the censure, placing of limitations, suspension, or bar is in the public interest and that the person has committed or omitted an act, or is subject to an order or finding, enumerated in the listed subparagraphs of paragraph (4) of Section 15(b); has been convicted of an offense specified in subparagraph (B) of paragraph (4) within ten years of the commencement of the proceedings; or is enjoined from any action, conduct, or practice specified in subparagraph (C) of paragraph (4).

The FINRA exemption from registration for clerical and ministerial functions is in Rule 1230 and is covered under Persons Exempt From Registration below.

The Registration Requirement

Under Rule 1210, each person engaged in the investment banking or securities business of a member shall be registered with FINRA as a representative or principal in each category of registration appropriate to his or her functions and responsibilities as specified in Rule 1220, unless exempt from registration pursuant to Rule 1230. Such person shall not be qualified to function in any registered capacity other than that for which the person is registered, unless otherwise stated in the rules.

Under Rule 1210.01, each member, except a member with only one associated person, shall have at least two officers or partners who are registered as General Securities Principals pursuant to Rule 1220(a)(2), provided that a member that is limited in the scope of its activities may instead have two officers or partners who are registered in a principal category under Rule 1220(a) that corresponds to the scope of the member’s activities.

Under Rule 1210.02, titled Permissive Registrations, a member may make application for or maintain the registration as a representative or principal pursuant to Rule 1220, of any associated person of the member and any individual engaged in the investment banking or securities business of a foreign securities affiliate or subsidiary of the member.

Representatives and Principals

Rule 1220 sets the definitions of principal and representative and lists the registration categories for each.

Under Rule 1220(a)(1), a “principal” is any person associated with a member, including, but not limited to, sole proprietor, officer, partner, manager of office of supervisory jurisdiction, director or other person occupying a similar status or performing similar functions, who is actively engaged in the management of the member’s investment banking or securities business, such as supervision, solicitation, conduct of business in securities or the training of persons associated with a member for any of these functions. Such persons shall include, among other persons, a member’s chief executive officer and chief financial officer (or equivalent officers). A “principal” also includes any other person associated with a member who is performing functions or carrying out responsibilities that are required to be performed or carried out by a principal under the FINRA rules.

Under Rule 1220(b)(1), a “representative” is any person associated with a member, including assistant officers other than principals, who is engaged in the member’s investment banking or securities business, such as supervision, solicitation, conduct of business in securities or the training of persons associated with a member for any of these functions.

Each definition uses the words “any person associated with a member”.

Registration Categories

As of October 2026, Rule 1220(a) lists these principal registration categories: General Securities Principal; Compliance Officer; Financial and Operations Principal and Introducing Broker-Dealer Financial and Operations Principal; Investment Banking Principal; Research Principal; Securities Trader Principal; Registered Options Principal; Government Securities Principal; General Securities Sales Supervisor; Investment Company and Variable Contracts Products Principal; Direct Participation Programs Principal; Private Securities Offerings Principal; and Supervisory Analyst.

As of October 2026, Rule 1220(b) lists these representative registration categories: General Securities Representative; Operations Professional; Securities Trader; Investment Banking Representative; Research Analyst; Investment Company and Variable Contracts Products Representative; Direct Participation Programs Representative; and Private Securities Offerings Representative.

Persons Exempt From Registration

Under Rule 1230, titled Associated Persons Exempt from Registration, the following persons associated with a member are not required to be registered with FINRA. The first group is persons associated with a member whose functions are solely and exclusively clerical or ministerial. The second group is persons associated with a member whose functions are related solely and exclusively to effecting transactions on the floor of a national securities exchange and who are appropriately registered with such exchange; transactions in municipal securities; transactions in commodities; or transactions in security futures, provided that any such person is registered with a registered futures association.

Rule 1230 refers to the exempt persons as persons associated with a member, and paragraph (ee)(2) of the By-Laws definition applies to the persons it lists whether or not any such person is registered or exempt from registration with FINRA.

Accepting Customer Orders

Under Rule 1230.01, the function of accepting customer orders is not considered a clerical or ministerial function. Each person associated with a member who accepts customer orders under any circumstances shall be registered in an appropriate registration category pursuant to Rule 1220.

An associated person shall not be considered to be accepting a customer order where occasionally, when an appropriately registered person is unavailable, the associated person transcribes order details submitted by a customer and the registered person contacts the customer to confirm the order details before entering the order.

Applying for Registration

Form U4, the Uniform Application for Securities Industry Registration or Transfer, is used by firms to register and update the registration information of associated persons. The Central Registration Depository (CRD) is the securities industry online registration and licensing database. Except as provided in Rule 1013(a)(2), Rule 1010 requires that all forms required to be filed by Article IV, Sections 1, 7, and 8, and Article V, Sections 2 and 3, of the FINRA By-Laws be filed through an electronic process, or such other process FINRA may prescribe, to the Central Registration Depository.

Under Article V, Section 2(a) of the By-Laws, an application by any person for registration with the Corporation, properly signed by the applicant, shall be made to the Corporation via electronic process or such other process as the Corporation may prescribe, on the form to be prescribed by the Corporation, and shall contain an agreement to comply with the federal securities laws, the rules and regulations thereunder, the rules of the Municipal Securities Rulemaking Board and the Treasury Department, the By-Laws of the Corporation, NASD Regulation, and NASD Dispute Resolution, the Rules of the Corporation, and all rulings, orders, directions, and decisions issued and sanctions imposed under the Rules of the Corporation; and such other reasonable information with respect to the applicant as the Corporation may require.

Under Article V, Section 2(b), the Corporation shall not approve an application for registration of any person who is not eligible to be an associated person of a member under the provisions of Article III, Section 3.

Under Article V, Section 2(c), every application for registration filed with the Corporation shall be kept current at all times by supplementary amendments via electronic process or such other process as the Corporation may prescribe to the original application. Such amendment to the application shall be filed with the Corporation not later than thirty days after learning of the facts or circumstances giving rise to the amendment. If such amendment involves a statutory disqualification as defined in Section 3(a)(39) and Section 15(b)(4) of the Act, such amendment shall be filed not later than ten days after such disqualification occurs.

Qualification Examinations

Under Rule 1210.03, titled Qualification Examinations and Waivers of Examinations, before the registration of a person as a representative can become effective under Rule 1210, such person shall pass the Securities Industry Essentials and an appropriate representative qualification examination as specified in Rule 1220(b).

The representative-level qualification examinations include the Series 6, Investment Company and Variable Contracts Products Representative Exam; the Series 7, General Securities Representative Exam; the Series 22, Direct Participation Programs Limited Representative Exam; the Series 57, Securities Trader Representative Exam; the Series 79, Investment Banking Representative Exam; the Series 82, Private Securities Offerings Representative Exam; the Series 86/87, Research Analyst Exam; and the Series 99, Operations Professional Exam.

The principal-level qualification examinations include the Series 4, Registered Options Principal Exam; the Series 9/10, General Securities Sales Supervisor Exam; the Series 14, Compliance Officer Exam; the Series 16, Supervisory Analyst Exam; the Series 23, General Securities Principal, Sales Supervisor Module Exam; the Series 24, General Securities Principal Exam; the Series 26, Investment Company Products and Variable Contracts Limited Principal Exam; the Series 27, Financial and Operations Principal Exam; the Series 28, Introducing Broker/Dealer Financial and Operations Principal Exam; and the Series 39, Direct Participation Programs Limited Principal Exam.

Background Investigation and Fingerprints

Rule 3110(e) places an investigation duty on the member that applies to register an applicant. Each member must ascertain by investigation the good character, business reputation, qualifications and experience of an applicant before the member applies to register that applicant with FINRA and before making a representation to that effect on the application for registration.

If the applicant previously has been registered with FINRA or another self-regulatory organization, the member must review a copy of the applicant’s most recent Form U5, including any amendments, within sixty days of the filing date of an application for registration, or demonstrate to FINRA that it has made reasonable efforts to do so. In conducting its review of the Form U5, the member shall take such action as may be deemed appropriate.

Each member must also establish and implement written procedures reasonably designed to verify the accuracy and completeness of the information contained in an applicant’s initial or transfer Form U4 no later than thirty calendar days after the form is filed with FINRA.

Except as otherwise provided in the rule, SEC Rule 17f-2 requires every member of a national securities exchange, broker, dealer, registered transfer agent and registered clearing agency to require that each of its partners, directors, officers and employees be fingerprinted. The firm must submit, or cause to be submitted, the fingerprints of such persons to the Attorney General of the United States or its designee for identification and appropriate processing.

Upon filing an electronic Form U4 on behalf of a person applying for registration, a member must promptly submit fingerprint information for that person. FINRA may make a registration effective pending receipt of the fingerprint information. If a member fails to submit the fingerprint information within thirty days after FINRA receives the electronic Form U4, the person’s registration is deemed inactive. In such a case, FINRA notifies the member that the person must immediately cease all activities requiring registration and is prohibited from performing any duties and functioning in any capacity requiring registration. FINRA administratively terminates a registration that is inactive for a period of two years. Upon application and a showing of good cause, FINRA may extend the thirty-day period.

Ineligibility and Statutory Disqualification

Under Article III, Section 3(b) of the By-Laws, no person shall become associated with a member, continue to be associated with a member, or transfer association to another member, if such person fails or ceases to satisfy the qualification requirements established under Section 2, if applicable, or if such person is or becomes subject to a disqualification under Section 4. No broker, dealer, municipal securities broker or dealer, or government securities broker or dealer shall be admitted to membership, and no member shall be continued in membership, if any person associated with it is ineligible to be an associated person under that subsection.

The term statutory disqualification is defined in Section 3(a)(39) of the Exchange Act. The disqualifying events under Section 3(a)(39) are as follows: certain misdemeanor and all felony criminal convictions for a period of ten years from the date of conviction; temporary and permanent injunctions (regardless of their age) issued by a court of competent jurisdiction involving a broad range of unlawful investment banking or securities activities; expulsions or bars (and current suspensions) from membership or participation in a self-regulatory organization (SRO) or foreign equivalent, which includes bars with a right to re-apply; bars (and current suspensions) ordered by the SEC, the Commodity Futures Trading Commission (CFTC) or other appropriate regulatory agency or authority, which includes bars with a right to re-apply; denials or revocations of registration by the SEC, CFTC or other appropriate regulatory agency or authority; findings by certain foreign entities; and findings that a member or person has made certain false statements in applications or reports made to, or in proceedings before, SROs, the SEC or other appropriate regulatory agency or authority.

The list continues with two further events. The first is any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in Section 3 of the Federal Deposit Insurance Act), or the National Credit Union Administration, that bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct. The second is findings by the SEC, CFTC or an SRO that a person willfully violated the federal securities or commodities laws, or the Municipal Securities Rulemaking Board (MSRB) rules; willfully aided, abetted, counseled, commanded, induced or procured such violations; or failed to supervise another who commits violations of such laws or rules. The list also includes certain associations with disqualified persons.

Generally speaking, a person who is subject to disqualification may not associate with a FINRA member in any capacity unless and until approved in an Eligibility Proceeding as set forth in Article III, Section 3(d) of FINRA’s By-Laws and FINRA Rule 9520 through Rule 9527.

Continuing Education

Under Rule 1240(a)(5), the term “covered person” means any person registered, or registering with FINRA as a representative or principal as specified in Rule 1220, including any person who is permissively registered as such pursuant to Rule 1210.02, and any person who is designated as eligible for a waiver pursuant to Rule 1210.09.

Rule 1240(a) is the Regulatory Element and Rule 1240(b) is the Firm Element. Under Rule 1240(a)(1), all covered persons shall comply with the requirement to complete the Regulatory Element. Under Rule 1240(a)(2), unless otherwise determined by FINRA, any covered person, other than a covered person designated as eligible for a waiver pursuant to Rule 1210.09, who has not completed the Regulatory Element within the prescribed calendar year in which the Regulatory Element is due will have his or her registration(s) deemed inactive until such time as he or she completes all required Regulatory Element, including any Regulatory Element that becomes due while his or her registration(s) is deemed inactive. Such a covered person shall cease all activities as a registered person and is prohibited from performing any duties and functioning in any capacity requiring registration. A registration that remains inactive for a period of two consecutive years will be administratively terminated by FINRA.

Under Rule 1240(b)(1), the Firm Element requirements apply to any person registered with a member, including any person who is permissively registered as a representative or principal pursuant to Rule 1210.02. Under Rule 1240(b)(2)(A), each member must maintain a continuing and current education program for its registered persons to enhance their securities knowledge, skill, and professionalism. At a minimum, each member shall at least annually evaluate and prioritize its training needs and develop a written training plan.

Termination of Association and Form U5

Form U5, the Uniform Termination Notice for Securities Industry Registration, is used by firms to terminate one or more of the registrations of associated persons and, if relevant, to detail why an individual left the firm. A Form U5 must be filed when an individual leaves a firm for any reason.

Following the termination of the association with a member of a person who is registered with it, the member must, not later than thirty days after the termination, give notice of the termination of the association to FINRA via electronic process or such other process as FINRA may prescribe on a form designated by FINRA. The member must concurrently provide to the person whose association has been terminated a copy of the notice as filed with FINRA. A member that does not submit the notification and provide a copy to the person whose association has been terminated, within the time period prescribed, is assessed a late filing fee as specified by FINRA.

The member must also notify FINRA by means of an amendment to the notice if the member learns of facts or circumstances causing any information set forth in the notice to become inaccurate or incomplete. The amendment must be filed with FINRA, and a copy provided to the person whose association with the member has been terminated, not later than thirty days after the member learns of the facts or circumstances giving rise to the amendment.

Under Article V, Section 3(a), termination of registration of such person associated with a member shall not take effect so long as any complaint or action under the Rules of the Corporation is pending against a member and to which complaint or action such person associated with a member is also a respondent, or so long as any complaint or action is pending against such person individually under the Rules of the Corporation. The Corporation, however, may in its discretion declare the termination effective at any time.

Jurisdiction After Termination

Under Article V, Section 4(a) of the By-Laws, a person whose association with a member has been terminated and is no longer associated with any member of the Corporation, or a person whose registration has been revoked or canceled, shall continue to be subject to the filing of a complaint under the Rules of the Corporation based upon conduct that commenced prior to the termination, revocation, or cancellation, or upon such person’s failure, while subject to the Corporation’s jurisdiction as provided in the section, to provide information requested by the Corporation pursuant to the Rules of the Corporation. Any such complaint shall be filed within two years after the effective date of termination of registration pursuant to Section 3; within two years after the effective date of revocation or cancellation of registration pursuant to the Rules of the Corporation; or, in the case of an unregistered person, within two years after the date upon which such person ceased to be associated with the member.

For a person whose registration was terminated pursuant to Section 3, any amendment to a notice of termination filed pursuant to Section 3(b) within two years of the original notice that discloses that such person may have engaged in conduct actionable under any applicable statute, rule, or regulation shall operate to recommence the running of the two-year period.

Under Article V, Section 4(b), a person whose association with a member has been terminated and is no longer associated with any member of the Corporation shall continue to be subject to a proceeding to suspend, consistent with Article VI, Section 3 of the By-Laws, his or her ability to associate with a member based on such person’s failure to comply with an arbitration award or a written and executed settlement agreement obtained in connection with an arbitration or mediation submitted for disposition pursuant to the Corporation’s Rules, provided that such proceeding is instituted within two years after the date of entry of such award or settlement.

Duties of Associated Persons Under FINRA Rules

Under Rule 0140(a), the rules shall apply to all members and persons associated with a member. Persons associated with a member shall have the same duties and obligations as a member under the rules.

Under Rule 8210(a)(1), for the purpose of an investigation, complaint, examination, or proceeding authorized by the FINRA By-Laws or rules, an Adjudicator or FINRA staff shall have the right to require a member, person associated with a member, or any other person subject to FINRA’s jurisdiction to provide information orally, in writing, or electronically (if the requested information is, or is required to be, maintained in electronic form) and to testify at a location specified by FINRA staff, under oath or affirmation administered by a court reporter or a notary public if requested, with respect to any matter involved in the investigation, complaint, examination, or proceeding. Under Rule 8210(a)(2), they have the right to inspect and copy the books, records, and accounts of such member or person with respect to any matter involved in the investigation, complaint, examination, or proceeding that is in such member’s or person’s possession, custody or control.

Outside Business Activities and Private Securities Transactions

Rule 3270 is titled Outside Business Activities of Registered Persons. Under Rule 3270, no registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member. Passive investments and activities subject to the requirements of Rule 3280 shall be exempted from this requirement.

Rule 3280 is titled Private Securities Transactions of an Associated Person. Under Rule 3280(a), no person associated with a member shall participate in any manner in a private securities transaction except in accordance with the requirements of the rule. Under Rule 3280(b), prior to participating in any private securities transaction, an associated person shall provide written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction; provided however that, in the case of a series of related transactions in which no selling compensation has been or will be received, an associated person may provide a single written notice.

Under Rule 3280(e)(1), “private securities transaction” means any securities transaction outside the regular course or scope of an associated person’s employment with a member, including, though not limited to, new offerings of securities which are not registered with the Commission, provided however that transactions subject to the notification requirements of Rule 3210, transactions among immediate family members (as defined in FINRA Rule 5130), for which no associated person receives any selling compensation, and personal transactions in investment company and variable annuity securities, shall be excluded.

Accuracy of Filings

No member or person associated with a member may file with FINRA information with respect to membership or registration which is incomplete or inaccurate so as to be misleading, or which could in any way tend to mislead, or fail to correct such filing after notice thereof. Rule 1122 sets this standard.

Public Information About Associated Persons

The general public can review information about investment professionals with the registration information collected through the CRD program, which is disclosable via BrokerCheck. BrokerCheck is a free tool from FINRA that can help the public research the professional backgrounds of investment professionals, brokerage firms and investment adviser firms.

Exam Relevance

Candidates should check the current outline for their examination.

The SIE Exam content outline, in Section 4, Overview of the Regulatory Framework, lists Topic 4.1, SRO Regulatory Requirements for Associated Persons. Topic 4.1.1, Registration and Continuing Education, lists SRO qualification and registration requirements, with definition of registered versus non-registered person, permitted activities of registered and non-registered persons, ineligibility for membership or association, background checks, fingerprinting, statutory disqualification, and failing to register an associated person listed beneath it; state registration requirements, with blue-sky laws named in parentheses; and the Continuing Education (CE) requirement, with Firm Element and Regulatory Element listed beneath it.

Topic 4.2, Employee Conduct and Reportable Events, lists Topic 4.2.1, Employee Conduct, which lists Form U4 and Form U5, with purpose and when to update forms named in parentheses; consequences of filing misleading information or omitting information; customer complaints; and potential red flags. Topic 4.2.2, Reportable Events, lists, among other bullets, outside business activities and private securities transactions.

The rules listed for Section 4 include FINRA By-Laws Article I, Definitions; Article III, Qualifications of Members and Associated Persons; Article V, Registered Representatives and Associated Persons; the 1000 Series, Member Application and Associated Person Registration; Rule 1122; Rule 1240; Rule 2263, Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4; Rule 3110(e); Rule 3270; Rule 3280, Private Securities Transactions of an Associated Person; and Municipal Securities Rulemaking Board (MSRB) Rule G-7, Information Concerning Associated Persons. The SEC Rules and Regulations list for Section 4 includes Section 3(a)(39) of the Securities Exchange Act of 1934, Definitions and Application of Title (Statutory Disqualification), and SEC Rule 17f-2, Fingerprinting of Securities Industry Personnel.

The Series 6, Series 7, Series 57 and Series 79 examinations in the Qualification Examinations section are representative-level examinations, and Rule 1210.03 requires an appropriate representative qualification examination together with the Securities Industry Essentials.

Common Misunderstandings

An associated person is the same as a registered representative. Under Rule 1220(b)(1), a representative is any person associated with a member, including assistant officers other than principals, who is engaged in the member’s investment banking or securities business. Under Rule 1220(a)(1), a principal is also a person associated with a member. A registered representative is one kind of associated person.

Only registered persons are associated persons. Paragraph (ee)(2) of the By-Laws definition reaches the persons it lists whether or not any such person is registered or exempt from registration with FINRA, and Rule 1230 is titled Associated Persons Exempt from Registration.

Every associated person must register. Under Rule 1210, each person engaged in the investment banking or securities business of a member shall be registered unless exempt from registration pursuant to Rule 1230, and Rule 1230 lists persons who are not required to be registered.

Accepting a customer order is a clerical function. Under Rule 1230.01, the function of accepting customer orders is not considered a clerical or ministerial function, and each person associated with a member who accepts customer orders under any circumstances shall be registered in an appropriate registration category pursuant to Rule 1220.

The clerical or ministerial exception removes a person from the Exchange Act definition for every purpose. Under Section 3(a)(18), the exception applies for purposes of Section 15(b) of the Act (other than paragraph (6) thereof).

Only a natural person can be an associated person. Under Section 3(a)(18) of the Act, the second group is any person directly or indirectly controlling, controlled by, or under common control with the broker or dealer, and under Section 3(a)(9) the term “person” means a natural person, company, government, or political subdivision, agency, or instrumentality of a government. The By-Laws definition in paragraph (ee)(2) refers to a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member.

The association ends when the person leaves the firm. Under Article V, Section 4(a), a person whose association with a member has been terminated and is no longer associated with any member of the Corporation shall continue to be subject to the filing of a complaint under the Rules of the Corporation within the periods the section sets, and each period is two years.

Form U5 is optional. A Form U5 must be filed when an individual leaves a firm for any reason, and the member must give notice of the termination not later than thirty days after the termination.

Every Form U4 change has a thirty-day deadline. Under Article V, Section 2(c), an amendment is filed not later than thirty days after learning of the facts or circumstances giving rise to the amendment, and an amendment involving a statutory disqualification as defined in Section 3(a)(39) and Section 15(b)(4) of the Act is filed not later than ten days after the disqualification occurs.

A statutory disqualification is a permanent bar to the industry. Generally speaking, a person who is subject to disqualification may not associate with a FINRA member in any capacity unless and until approved in an Eligibility Proceeding as set forth in Article III, Section 3(d) of FINRA’s By-Laws and FINRA Rule 9520 through Rule 9527.

Only the member firm has duties under FINRA rules. Under Rule 0140(a), persons associated with a member shall have the same duties and obligations as a member under the rules.

Outside business activities and private securities transactions are the same. Rule 3270 applies to a registered person and Rule 3280 applies to a person associated with a member. Passive investments and activities subject to the requirements of Rule 3280 are exempted from Rule 3270.

Key Points to Retain

An associated person is a person within the definition in Section 3(a)(18) of the Securities Exchange Act of 1934 or in Article I, paragraph (ee) of the FINRA By-Laws.

Under the Exchange Act definition, the groups are any partner, officer, director, or branch manager (or any person occupying a similar status or performing similar functions); any person directly or indirectly controlling, controlled by, or under common control with the broker or dealer; and any employee of the broker or dealer.

The Exchange Act exception for persons whose functions are solely clerical or ministerial applies for purposes of Section 15(b) of the Act, other than paragraph (6).

Under Rule 1210, each person engaged in the investment banking or securities business of a member shall be registered as a representative or principal in each category appropriate to his or her functions and responsibilities as specified in Rule 1220, unless exempt from registration pursuant to Rule 1230.

Rule 1230 lists persons associated with a member who are not required to be registered, including persons whose functions are solely and exclusively clerical or ministerial. The function of accepting customer orders is not considered a clerical or ministerial function.

Before the registration of a person as a representative can become effective, the person shall pass the Securities Industry Essentials and an appropriate representative qualification examination as specified in Rule 1220(b).

An application for registration is kept current by amendments filed not later than thirty days after learning of the facts or circumstances giving rise to the amendment, and not later than ten days after a statutory disqualification occurs.

A member must give notice of a termination on Form U5 not later than thirty days after the termination, and must concurrently provide the person a copy of the notice as filed.

A person whose association has terminated continues to be subject to a complaint filed within two years under Article V, Section 4(a) of the By-Laws.

Generally speaking, a person who is subject to disqualification may not associate with a FINRA member in any capacity unless and until approved in an Eligibility Proceeding.

Persons associated with a member have the same duties and obligations as a member under the FINRA rules, and FINRA may require a person associated with a member to provide information and testimony under Rule 8210.

The SIE Exam content outline lists Topic 4.1, SRO Regulatory Requirements for Associated Persons, and Topic 4.2, Employee Conduct and Reportable Events, in Section 4, Overview of the Regulatory Framework.