📜 FINRA Rules Every Candidate Should Know

When preparing for FINRA exams like Series 6, 63, 65, 66, or Series 24, it’s essential to familiarize yourself with the rules and regulations that govern the financial industry. Understanding these rules not only helps you pass your exam but also ensures compliance throughout your career as a financial professional.

Here’s a breakdown of the most important FINRA rules you must understand before sitting for your exam.

🧑‍⚖️ 1. FINRA Rule 2111 – Suitability

🔍 What It Covers:

• This rule mandates that recommendations made to clients must be suitable based on their financial situation, needs, and investment objectives.
• Three components of suitability:
  • Customer’s investment profile (risk tolerance, financial goals, etc.)
  • Reasonable basis for the recommendation
  • Quantitative suitability (ensuring that a recommendation isn’t excessive)

🎯 Why It’s Important:

• This rule is central to determining whether an investment recommendation is appropriate for a client based on their individual circumstances.
• Key exam focus: Recognizing suitable recommendations based on customer profiles.

🏛️ 2. FINRA Rule 3110 – Supervision

🔍 What It Covers:

• Requires firms to establish and maintain supervisory systems to ensure compliance with FINRA rules and federal securities laws.
• Brokers and firms must have written supervisory procedures (WSPs) in place to oversee the activities of registered representatives.

🎯 Why It’s Important:

• As a financial professional, you must know how supervision is conducted within a firm, especially regarding sales practices and client transactions.

📑 3. FINRA Rule 2210 – Communications with the Public

🔍 What It Covers:

• Sets requirements for advertising, marketing materials, and communications with clients or potential clients, including:
  • Advertising must be fair, balanced, and not misleading.
  • All communications must disclose the risks of securities and investments.

🎯 Why It’s Important:

• Candidates should understand what constitutes acceptable and unacceptable communications with the public, as it directly impacts compliance, especially for marketing materials.

🚫 4. FINRA Rule 2010 – Standards of Commercial Honor and Principles of Trade

🔍 What It Covers:

• This rule states that **members must conduct business with integrity and honesty in every aspect of their practice.
• It addresses issues like market manipulation, misleading statements, and fraudulent practices.

🎯 Why It’s Important:

• Professional ethics are essential to the Series 6 and Series 65 exams. You’ll need to understand the principles behind ethical behavior and fair dealing.

🏦 5. FINRA Rule 2232 – Customer Confirmations

🔍 What It Covers:

• This rule requires that customer confirmations be provided to clients, detailing securities transactions (i.e., purchase or sale of securities).
• The confirmation must include the price of the security, the quantity of securities, the commission, and any other relevant charges.

🎯 Why It’s Important:

• Candidates must know when and how customer confirmations should be provided and the importance of ensuring that these disclosures comply with FINRA regulations.

💡 6. FINRA Rule 5130 – Prohibition Against Trading in New Issues

🔍 What It Covers:

• Prevents restricted persons (such as underwriters, brokers, and their immediate family members) from purchasing shares of new issues (IPO or initial public offerings).
• It ensures that the shares are offered to the public and not to industry insiders who may receive preferential treatment.

🎯 Why It’s Important:

• New issue rules are tested in various exams, especially Series 7 and Series 6, because candidates need to understand restrictions around IPO purchases.

💼 7. FINRA Rule 3230 – Telemarketing

🔍 What It Covers:

• Establishes guidelines for telemarketing practices, such as prohibiting cold calling before certain hours and requiring do-not-call list compliance.
• Disclosures must be made to the client during the call.

🎯 Why It’s Important:

• Candidates need to be aware of ethical sales practices and compliance standards for telemarketing within the financial industry.

📊 8. FINRA Rule 4311 – Margin Requirements

🔍 What It Covers:

• Regulates the use of margin accounts and sets guidelines for borrowed funds to purchase securities.
• Specifies initial margin requirements and maintenance margin levels.

🎯 Why It’s Important:

• This rule is relevant for Series 7 candidates and those who will manage margin accounts, ensuring that they understand how to calculate margin requirements and manage risk.

📉 9. FINRA Rule 3020 – Order Ticket Requirements

🔍 What It Covers:

• Defines the required details that must be included on an order ticket for both purchase and sale transactions.
• Includes information like the time of order, price, and buyer/seller details.

🎯 Why It’s Important:

• Candidates must understand order execution requirements and documentation protocols to ensure compliance.

📅 10. FINRA Rule 3111 – Anti-Money Laundering (AML)

🔍 What It Covers:

• Requires firms to establish an AML program to detect and report suspicious activities.
• Firms must also implement customer due diligence to ensure the legitimacy of transactions.

🎯 Why It’s Important:

• AML rules are tested for many FINRA exams, especially Series 6 and Series 65. Candidates must understand red flags and reporting requirements related to money laundering.

🧠 How to Study These Rules

• Use flashcards for rule numbers and key concepts to aid memorization.
• Understand the context: Knowing why and how each rule is applied in real-world scenarios is critical for the exam.
• Practice with scenario-based questions: These often test your ability to apply FINRA rules to specific situations.

🎓 Ready to dive deeper into FINRA rules and pass your exam with confidence?
Access detailed study materials, practice tests, and expert insights at finra-exam-mastery.com — your path to mastering FINRA regulations and acing your exam.