SEC Approves Rule Change for New Investment Banker Registration Category and New Series 79

By: David Carroll. This was posted Tuesday, September 15th, 2009

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Good news for investment bankers, financial intermediaries and business brokers — there is finally an NASD exam and registration tailored to your work. Rather than having to meet the requirements of the Series 7 license, the Securities and Exchange Commission has approved a rule change creating a new “Limited Representative — Investment Banker Registration” category and the Series 79 investment banking exam.

For many in the investment banking community most of the requirements of the Series 7 license do not apply directly to their work. Investment bankers doing mergers and acquisitions often complain that the Series 7 exam does not relate well to what they do day-to-day and is not a good test of what they need to know to be effective investment bankers. Beginning November 2, 2009, amendments to NASD Rules 1022 and 1032 require individuals whose activities are limited to investment banking and principals who supervise such activities to pass the new Limited Representative – Investment Banking Qualification Examination (Series 79 Exam).

The Financial Industry Regulatory Authority (FINRA) has developed this exam “to provide a more targeted assessment of the job functions performed by the individuals that fall within the registration category.” This exam seems well suited for transaction professionals in M&A boutiques, financial intermediaries, and business brokers who work on mergers, acquisitions, buyouts, refinancings, and financial restructuring as well as public investment banking.

NASD Rule 1032(i) requires an associated person to register with FINRA as a Limited Representative – Investment Banking (Investment Banking Representative) and pass a corresponding qualification examination (Series 79) if such person’s activities involve:

  1. Advising on or facilitating debt or equity securities offerings through a private placement or a public offering, including but not limited to origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization activities of such offerings, or
  2. Advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions, including but not limited to rendering a fairness, solvency or similar opinion.

The registration category does not cover individuals whose investment banking work is limited to public (municipal) finance or direct participation programs as defined in NASD Rule 1022(e)(2). Moreover, individuals whose investment banking work is limited to effecting private securities offerings as defined in NASD Rule 1032(h)(1)(A) may continue to function in such capacity by registering as a Limited Representative – Private Securities Offerings and passing the corresponding Series 82 exam.

The topics covered on the exam include: (i) collection, analysis and evaluation of data; (ii) underwriting/new financing transactions, types of offerings, registration of securities; (iii) mergers, acquisitions, tender offers and financial restructuring transactions; and (iv) general securities industry regulations.

What about those registered representatives who already have their Series 7 license? The good news is that these reps will be able to “opt in” during a six-month window and receive the qualification for the new investment banking representative license without having to take the exam and will retain their Series 7 registration. Investment bankers who hold the Series 7 registration, as well as those who have passed and are registered with a “Series 7-equivalent exam” may opt in to the Investment Banking Representative registration, provided that, as of the date they opt in, such individuals are engaged in investment banking activities covered by Rule 1032(i). Those individuals who choose to opt in will retain their Series 7 or Series 7-equivalent registered representative registration in addition to the investment banking registration. After May 3, 2009, any person who wishes to engage in the specified investment banking activities will be required to pass the Series 79 Exam or obtain a waiver.

The registration and qualification requirements for Investment Banking Representatives will become effective November 2, 2009. The six-month opt-in period will begin on that date and end May 3, 2010.

Go to for a FINRA’s Regulatory Notice, which summarizes the new Limited Representative Investment Banker category and the Series 79 exam.

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  • I enjoy reading your posts. Thanks for all the hard work. Sara

    Posted by: debt big | January 27th, 2010 at 3:17 am
  • I’ve been giving a lot of thought to this lately, and I think it’s something that more people should be focusing on. We can’t expect to get anywhere if we just keep our heads buried in the sand.

    Posted by: Jarod Thurner | January 7th, 2010 at 8:46 pm
  • I recommend that you check out Merrill Lynch at the FINRA web site and click on Investor. FINRA (Financial Industry Regulatory Authority) has a report called: BrokerCheck. You can access a detailed report if you keep drilling down. With a firm the size and scope of Merrill Lynch you should be able to find plenty of information.

    I hope this helps.


    Posted by: David Carroll | November 17th, 2009 at 9:56 am
  • I am currently looking for work in investment banking, I am seeking a company related to Bank of America and was curious if Merrill Lynch , is still in good standing with SEC regulations? I know this can be a very controversial topic, however, I do not want to begin work; as they have seen problems in the past. I am a future intern of Merrill and would be very interested in their program.

    I had initiated a company, which I originally intended for. A regulatory commission over seeing people take the series 79 and series 82 exam might be a better route, for some. I am currently a student in Phoenix, AZ and am interested in information on taking the exam outside of a bank representative. If so, please forward it to my e-mail, if not I am still ready for work..

    Just a little hesitant.

    Thank you
    David D. Kasowski
    Lionel (L) Investments & Co.

    Posted by: David Kasowski | November 2nd, 2009 at 5:35 pm

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