What Is the Series 26 Exam?
Series 26 is the Investment Company and Variable Contracts Products Principal Qualification Exam. The exam assesses the competency of an entry-level principal to perform their job as an investment company and variable products principal. It measures the degree to which each candidate possesses the knowledge needed to perform the critical functions of an investment company and variable products principal, including the rules and statutory provisions applicable to the supervisory management of companies registered under the Investment Company Act of 1940.
The Series 26 is the qualification examination for one principal registration category under FINRA Rule 1220(a)(11), the Investment Company and Variable Contracts Products Principal.
What a Principal Is
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 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.
The term actively engaged in the management of the member's investment banking or securities business includes the management of, and the implementation of corporate policies related to, such business. The term also includes managerial decision-making authority with respect to the member's investment banking or securities business and management-level responsibilities for supervising any aspect of such business, such as serving as a voting member of the member's executive, management or operations committees.
The Supervisory Role of a Principal
Each member must establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules. Each member must also establish, maintain, and enforce written procedures to supervise the types of business in which it engages and the activities of its associated persons that are reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules.
Rule 3110 calls for the designation, where applicable, of an appropriately registered principal or principals with authority to carry out the supervisory responsibilities of the member for each type of business in which it engages for which registration as a broker-dealer is required.
The Registration Category
Each principal as defined in Rule 1220(a)(1) is required to register with FINRA as a General Securities Principal, subject to exceptions. Under one exception, if a principal's activities are limited solely to the functions of an Investment Company and Variable Contracts Products Principal as specified in paragraph (a)(11) of the rule, then such person may appropriately register in that category in lieu of registering as a General Securities Principal. The same exception applies to a principal whose activities are limited solely to the functions of a Government Securities Principal, a Direct Participation Programs Principal or a Private Securities Offerings Principal as specified in paragraphs (a)(9), (a)(12) or (a)(13) of the rule. Each principal as defined in paragraph (a)(1) of the rule may register with FINRA as an Investment Company and Variable Contracts Products Principal if his or her activities in the investment banking or securities business of a member are limited to the activities specified in paragraph (b)(7) of the rule.
Paragraph (b)(7) limits those activities to the solicitation, purchase or sale of redeemable securities of companies registered pursuant to the Investment Company Act; securities of closed-end companies registered pursuant to the Investment Company Act during the period of original distribution only; variable contracts and insurance premium funding programs and other contracts issued by an insurance company except contracts that are exempt securities pursuant to Section 3(a)(8) of the Securities Act; or municipal fund securities as defined under Municipal Securities Rulemaking Board (MSRB) Rule D-12.
The covered supervisory activities and products include regulatory compliance over sales of closed-end funds (initial offering only), mutual funds, variable annuities and variable life insurance.
Qualifying for the Registration
Each person engaged in the investment banking or securities business of a member must 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 is not qualified to function in any registered capacity other than that for which the person is registered, unless otherwise stated in the rules.
Each person seeking to register as an Investment Company and Variable Contracts Products Principal must, prior to or concurrent with such registration, either become registered pursuant to paragraph (b)(2) of Rule 1220 as a General Securities Representative and pass the Investment Company and Variable Contracts Products Principal qualification examination, or become registered pursuant to paragraph (b)(7) of the rule as an Investment Company and Variable Contracts Products Representative and pass the Investment Company and Variable Contracts Products Principal qualification examination.
Candidates must be associated with and sponsored by a FINRA member firm or other applicable self-regulatory organization (SRO) member firm to be eligible to take FINRA principal-level qualification exams. In addition to the Series 26 exam, candidates must pass the Securities Industry Essentials (SIE) Exam and the Investment Company and Variable Contracts Products Representative Exam (Series 6) or General Securities Representative Exam (Series 7) to hold the Investment Company and Variable Contracts Products Principal registration. The Series 26 has corequisite exam requirements.
Before the registration of a person as a representative can become effective under Rule 1210, such person must pass the SIE and an appropriate representative qualification examination as specified in Rule 1220(b).
What the Exam Covers
As of October 2026, the Series 26 consists of 110 multiple-choice items, which are distributed among three major content areas. The time allowed is two hours and forty-five minutes.
Function 1, Personnel Management Activities and Registration of the Broker-Dealer, has 16 items. Function 2, Supervises Associated Persons and Oversees Sales Practices, has 49 items. Function 3, Oversees Compliance and Business Processes of the Broker-Dealer and its Offices, has 45 items.
Function 1: Personnel Management and Registration
The first task is to conduct personnel management activities and administer the registration of the broker-dealer and associated persons in the Central Registration Depository (CRD) System by filing, updating or amending appropriate documents. The knowledge listed for this task includes Securities and Exchange Commission (SEC), SRO and state requirements, including basic information about registration requirements and exemptions; the filing requirements of the Uniform Forms U4, U5, BD, BDW, and BR; pre-hire requirements based on background, disciplinary, complaint or financial history and registration or affiliation; differences between registered investment adviser and broker-dealer, broker-dealer and non-broker-dealer, and members and non-members, including registration requirements; permitted activities of registered and non-registered associated persons; and requirements for heightened supervision.
The second task is to provide training and education on securities industry structure, rules and regulations, product characteristics, and firm policies. The knowledge listed includes product types, characteristics, fees and charges; risk characteristics of investment companies and underlying products; regulatory element and firm element continuing education requirements; and the annual compliance meeting requirement.
Function 2: Supervision of Associated Persons and Sales Practices
The first task is to monitor, supervise and document the sales activities of associated persons to achieve compliance with securities industry rules and regulations and firm policies and to provide feedback regarding product knowledge and performance. The knowledge listed includes standards of conduct and prohibited activities; regulatory requirements to manage conflicts of interests; and regulatory requirements related to personal trading.
The second task is to monitor, review and approve communications with the public to achieve compliance with securities industry rules, regulations, filing requirements and firm policies. The knowledge listed includes advertising regulations and requirements; definitions and differences among retail communications, institutional communications and correspondence; telemarketing requirements; regulation of telephone solicitations (cold calling) including national telephone solicitation rules and the National Do Not Call Registry; regulations regarding public appearances, including sales prospecting, seminars and speaking engagements; prohibitions on misleading sales literature and factors affecting whether sales literature might be misleading; and appropriate use of professional designations.
The third task is to supervise recommendations and the handling of customers' accounts and transactions for appropriate disclosures concerning products, sales charges, risks, services, costs, fees, and delivery of disclosure and legal documents. The knowledge listed includes required information to establish a new account; mutual fund and variable product account and transaction characteristics; reasonable-basis, customer-specific and quantitative care obligations; investment strategies and recommendations to hold; and regulatory requirements for point-of-sale and on-going disclosures to customers.
The fourth task is to supervise compliance with FINRA's cash and non-cash compensation rules. The knowledge listed includes limits on gifts and business entertainment; restrictions on receipt of cash compensation; restrictions regarding training and educational meetings and sales contests; rules and regulation regarding influencing employees of others, including associated persons of other broker-dealers; payments for referrals; and networking arrangements.
The fifth task is to review and approve or prohibit outside business and personal financial activities of associated persons, and the knowledge listed is notification and approval requirements. The sixth task is to take action, as necessary, regarding the conduct of associated persons and to address violations or potential violations of securities industry rules and regulations and firm policies and procedures. The knowledge listed is insider trading and related internal control policies and procedures, and civil and criminal penalties.
Function 3: Compliance and Business Processes
The first task is to supervise the firm's operational processes for compliance with regulatory requirements related to the opening and ongoing maintenance of customer accounts. The knowledge listed includes required content for new account forms and product application; the requirement to maintain current and accurate account information; delivery of securities; cash accounts; prompt payment for securities purchased, extensions of time, and frozen accounts; transferring accounts between broker-dealers, with the Automated Customer Account Transfer Service (ACATS) named in parentheses; account registration changes and internal transfers, with Transfer on Death (TOD) and divorce named in parentheses; and privacy requirements including controls to safeguard customers' personal information.
The second task is to monitor, identify and report suspicious activities consistent with regulatory and firm requirements and to verify that documentation is retained and filed. The knowledge listed includes red flags and escalation requirements upon discovery of suspicious or prohibited activities; the Bank Secrecy Act (BSA) and USA PATRIOT Act; the Office of Foreign Assets Control (OFAC); the Financial Crimes Enforcement Network (FinCEN); anti-money laundering regulations; Currency Transaction Reporting (CTR) and Suspicious Activity Report (SAR); and the requirement to verify that accounts comply with the Customer Identification Program (CIP).
The third task is to develop, implement and test the adequacy of internal controls and monitor business activities for compliance with regulatory and reporting requirements. The knowledge listed includes the requirement that all activities and systems have proper controls; appropriate testing of the firm's written supervisory procedures and controls, including the chief executive officer (CEO) Certification; regulatory requirements for firm's systems and technologies; requirements to implement and test the firm's business continuity plan (BCP); exception reports and risk management; annual audit and testing requirements; and requirements for handling of customer funds.
The fourth task is to perform required office inspections to verify compliance with regulatory requirements and firm policies and procedures. The knowledge listed includes books and records requirements; the requirement to conduct periodic inspections and reviews of activities of personnel located at offices of supervisory jurisdiction (OSJ), branch offices and unregistered office locations; supervisory files; and appropriate signage based on office classification.
The fifth task is the proper handling, resolution and required regulatory reporting of customer complaints, and the knowledge listed is disclosure reporting and filing requirements. The sixth task is to supervise introduction, maintenance and reporting requirements of products and business lines and financial responsibility compliance. The knowledge listed includes minimum requirements, aggregate indebtedness and net capital notification provisions; adjustments to net worth for illiquid assets and the effect on capital of proprietary positions; coverage restrictions and limitations of the Securities Investor Protection Corporation (SIPC); the due diligence process for products offered by the firm; policies, procedures and controls before introducing new products or business lines; delivery requirements for annual reports and notices of corporate actions, with proxy statements named in parentheses; and continuance in membership applications (CMA).
Retaking a Failed Examination
As of October 2026, any person who fails to pass a qualification examination prescribed by FINRA is permitted to take that examination again after a period of fifteen calendar days has elapsed from the date of such person's last attempt to pass that examination, except that any person who fails to pass an examination three or more times in succession within a two-year period is prohibited from again taking that examination until a period of sixty calendar days has elapsed from the date of such person's last attempt to pass that examination. These waiting periods apply to the SIE and the representative and principal examinations specified under Rule 1220.
Exam Relevance
The Securities Industry Essentials examination content outline does not name the Series 26 or any principal qualification examination. Topic 4.1.1, Registration and Continuing Education, under 4.1, SRO Regulatory Requirements for Associated Persons, in Section 4, Overview of the Regulatory Framework, 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 requirement, with Firm Element and Regulatory Element listed beneath it.
The rules listed for Section 4 include the FINRA Rules 1000 Series, Member Application and Associated Person Registration, and Rule 3110(e), Responsibility of Member to Investigate Applicants for Registration. Candidates should check the current outline before the examination.
Common Misunderstandings
The Series 26 qualifies a principal to supervise every securities product. The registration category is limited to principals whose activities in the investment banking or securities business of a member are limited to the activities specified in paragraph (b)(7) of Rule 1220.
The Series 26 is open to anyone, like the SIE. Candidates must be associated with and sponsored by a FINRA member firm or other applicable SRO member firm to be eligible to take FINRA principal-level qualification exams.
The Series 26 replaces the Series 6 or Series 7. In addition to the Series 26 exam, candidates must pass the SIE and the Series 6 or Series 7 to hold the registration, and the Series 26 has corequisite exam requirements.
Only senior officers are principals. 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.
The exam covers only product knowledge. The exam consists of 110 multiple-choice items distributed among personnel management and registration, supervision of associated persons and oversight of sales practices, and oversight of compliance and business processes of the broker-dealer and its offices.
The Series 26 covers only mutual funds. The covered supervisory activities and products include regulatory compliance over sales of closed-end funds (initial offering only), mutual funds, variable annuities and variable life insurance.
A registered person may function in any registered capacity. Such person is not qualified to function in any registered capacity other than that for which the person is registered, unless otherwise stated in the rules.
Key Points to Retain
The Series 26 is the Investment Company and Variable Contracts Products Principal Qualification Exam.
A principal is any person associated with a member who is actively engaged in the management of the member's investment banking or securities business, and the term also includes persons performing functions required of a principal under the FINRA rules.
A principal may register as an Investment Company and Variable Contracts Products Principal if his or her activities are limited to the activities specified in paragraph (b)(7) of Rule 1220.
Candidates must be associated with and sponsored by a member firm, and must pass the SIE, the Series 6 or Series 7, and the Series 26.
The exam is organized into personnel management and registration, supervision of associated persons and sales practices, and compliance and business processes.
Rule 3110 requires a supervisory system and written supervisory procedures reasonably designed to achieve compliance.
The covered products are closed-end funds (initial offering only), mutual funds, variable annuities and variable life insurance.
As of October 2026, the retake waiting period is fifteen calendar days, or sixty calendar days after three or more failures in succession within a two-year period.
The Securities Industry Essentials examination content outline does not name the Series 26, and Topic 4.1.1 covers SRO qualification and registration requirements.
