Firms that effect securities transactions for others generally must register with the SEC as broker-dealers, join a self-regulatory organization such as FINRA, and in most cases join SIPC. Individual bankers must be associated with a member firm and pass the SIE plus a qualification exam such as the Series 79 or Series 82, with state requirements such as the Series 63 on top. Anyone can check a firm's or banker's registration and disciplinary history for free on FINRA's BrokerCheck.
In this lesson you will
- Describe the SEC registration process for broker-dealers and the role of FINRA and SIPC.
- Match FINRA and NASAA qualification exams (SIE, Series 79, 82, 24 and 63) to the activities they cover.
- Explain the statutory M&A broker exemption and its limits.
- Use BrokerCheck and related tools to verify a firm or individual.
Layer one: SEC registration
Section 15(a)(1) of the Securities Exchange Act generally makes it unlawful for a broker or dealer to use the mails or any means of interstate commerce to effect, or induce the purchase or sale of, any security unless it is registered with the SEC [2]. Firms apply on Form BD, filed through the Central Registration Depository (CRD) operated by FINRA, and within 45 days of a completed application the SEC either grants registration or begins proceedings to decide whether to deny it [2]. The SEC's small-business guidance sums it up: brokers generally must register with the SEC and become members of FINRA [1].
Registration has teeth for issuers too. The SEC warns that companies or their personnel that do not comply with broker-dealer registration requirements could face civil or criminal lawsuits, rescission and future capital-raising challenges [1].
Layer two: FINRA and SIPC
Before it begins doing business, a broker-dealer must become a member of a self-regulatory organization, and a firm that effects transactions other than on an exchange of which it is a member, including any over-the-counter business, must join FINRA unless it qualifies for a narrow exemption [2]. SROs such as FINRA assist the SEC in regulating the activities of broker-dealers [2]. Most registered broker-dealers must also be members of the Securities Investor Protection Corporation [2]. SIPC protects customers against the loss of cash and securities held at a failed member firm, up to $500,000, including a $250,000 limit for cash [3]. State registration may also be required, and state timelines can differ from federal and FINRA timelines [2].
Layer three: the people
Individuals who work for a broker-dealer are its "associated persons" and must be supervised by the registered firm, and the firm files a Form U4 to register each one with the relevant SRO [2]. The licensing path starts with the Securities Industry Essentials (SIE) exam, which is open to anyone 18 or older without firm sponsorship and whose results are valid for four years [5]. Passing the SIE alone does not qualify anyone to engage in securities business; a candidate must also pass a qualification exam suited to their role, and must be associated with a member firm to take it [5].
- Series 79 (Investment Banking Representative): covers advising on or facilitating debt or equity offerings and mergers and acquisitions; candidates need the SIE plus the Series 79 [6]. The exam has 75 scored questions and a 2 hour 30 minute time limit [7].
- Series 82 (Private Securities Offerings Representative): qualifies the holder, with the SIE, for solicitation and sale of private placement securities as part of a primary offering [8].
- Series 7 (General Securities Representative): FINRA explains that bankers who actively market an offering to investors, for example on a road show, need Series 7 or Series 82 registration in addition to the Series 79, depending on the offering [6].
- Series 24 (General Securities Principal): supervisors of investment banking activity register as Investment Banking Principals, which requires Investment Banking Representative registration plus the General Securities Principal exam [10][4].
- Series 63 (Uniform Securities Agent State Law Exam): a NASAA exam administered by FINRA, with 60 scored questions and a passing mark of 43 [9]. Whether a person needs it is a question of state law [4].
Rules are still moving. FINRA's exam pages note that, effective January 19, 2027, waiting periods for retaking FINRA qualification exams will be reduced, as described in Regulatory Notice 26-18 [6].
The M&A broker exemption
Congress created a federal registration exemption for "M&A brokers" in Section 15(b)(13) of the Exchange Act [11][12]. It covers brokers effecting securities transactions solely to transfer ownership of an "eligible privately held company," which, in the fiscal year before the engagement, had EBITDA under $25 million and/or gross revenues under $250 million [11]. The exemption is narrow: it does not apply if the broker handles the parties' funds or securities, provides financing, binds a party, or deals with passive buyers, and the buyer must be expected to control and actively manage the business [11]. After the statute took effect, SEC staff withdrew its 2014 M&A broker no-action letter on March 29, 2023 [12]. Because it covers only transfers of ownership to buyers who will control and manage the company, raising capital from passive investors falls outside it [11].
How to check a firm or a banker
BrokerCheck is FINRA's free tool for researching brokerage firms, investment professionals and investment adviser firms [13]. Its data come from CRD, and an individual's report shows registrations and licenses, qualifications, up to ten years of employment history and disclosures such as customer disputes, disciplinary events and certain criminal and financial matters [13]. FINRA notes that BrokerCheck can be used to research firms as well as individuals, suggests also contacting your state securities regulator, and warns that scammers sometimes misuse the names of real registered professionals or firms [14].
Key terms
- Broker-dealer registration
- SEC registration under Exchange Act Section 15(b), applied for on Form BD through FINRA's CRD system.
- Self-regulatory organization (SRO)
- A body such as FINRA or a national securities exchange that writes and enforces rules for its members under SEC oversight.
- SIPC
- The Securities Investor Protection Corporation, which protects customers of failed member firms up to $500,000, including $250,000 for cash.
- SIE
- Securities Industry Essentials exam; an introductory FINRA exam that must be paired with a qualification exam for registration.
- Series 79
- FINRA's Investment Banking Representative exam, covering offerings, M&A, tender offers and restructurings.
- Series 63
- NASAA's Uniform Securities Agent State Law Exam, administered by FINRA; required according to state law.
- Eligible privately held company
- Under the M&A broker exemption, a non-reporting company with prior-year EBITDA under $25 million and/or gross revenues under $250 million.
- BrokerCheck
- FINRA's free public database of registered firms and individuals, drawing on CRD records.
Check your understanding
Sources
- [1]U.S. Securities and Exchange Commission, “Broker-Dealers,” April 24, 2026.
- [2]U.S. Securities and Exchange Commission, Division of Trading and Markets, “Guide to Broker-Dealer Registration,” December 12, 2016.
- [3]Securities Investor Protection Corporation, “What SIPC Protects,” Accessed November 2026.
- [4]FINRA, “Qualification Exams,” Accessed November 2026.
- [5]FINRA, “Securities Industry Essentials® (SIE®) Exam,” Accessed November 2026.
- [6]FINRA, “Series 79 – Investment Banking Representative Exam,” Accessed November 2026.
- [7]FINRA, “Investment Banking Representative Qualification Exam (Series 79) Content Outline,” 2025.
- [8]FINRA, “Series 82 – Private Securities Offerings Representative Exam,” Accessed November 2026.
- [9]FINRA, “Series 63 – Uniform Securities Agent State Law Exam,” Accessed November 2026.
- [10]FINRA, “1220. Registration Categories,” Accessed November 2026.
- [11]Legal Information Institute, Cornell Law School, “15 U.S. Code § 78o - Registration and regulation of brokers and dealers,” Accessed November 2026.
- [12]U.S. Securities and Exchange Commission, Division of Trading and Markets, “M&A Brokers,” March 29, 2023.
- [13]FINRA, “About BrokerCheck,” Accessed November 2026.
- [14]FINRA, “Check Registration: Sellers and Investments,” Accessed November 2026.
Educational content only — not legal, tax, or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Rules and data are described as of November 2026 and may change. Securities offered through Umergence LLC, Member FINRA/SIPC.