Key Regulatory Terms for FINRA Exams

📚 Key Regulatory Terms for FINRA Exams

Essential Vocabulary You Must Know to Pass

Mastering regulatory terminology is crucial for success on all FINRA exams, including Series 6, 7, 24, 63, 65, and 66. Understanding these terms not only helps answer direct vocabulary questions but also helps you navigate complex scenarios.

Here’s a focused list of key regulatory terms you must know:

🏛️ Regulatory Bodies and Their Roles

📜 FINRA (Financial Industry Regulatory Authority)
Self-regulatory organization overseeing broker-dealers and registered reps.

📜 SEC (Securities and Exchange Commission)
Federal agency enforcing securities laws and regulating securities markets.

📜 MSRB (Municipal Securities Rulemaking Board)
Creates rules for municipal securities dealers; enforcement is handled by FINRA or the SEC.

📜 NASAA (North American Securities Administrators Association)
Protects investors at the state level and creates model rules for exams like Series 63 and 66.

📋 Core Concepts and Definitions

📄 Broker-Dealer
A firm that buys and sells securities for itself and for customers.

📄 Investment Adviser
An individual or firm compensated for giving advice about securities.

📄 Registered Representative
An individual licensed to sell securities products to clients on behalf of a broker-dealer.

📄 Principal
A person registered to supervise registered representatives and firm operations.

📄 Form U4
Registration form for individuals seeking to become registered with a FINRA-member firm.

📄 Form U5
Termination form filed when a registered representative leaves or is terminated.

⚖️ Compliance and Ethical Standards

⚖️ Suitability
The requirement that recommendations must match a client’s financial situation, needs, and objectives.

⚖️ Fiduciary Duty
The highest standard of care—advisers must act in the best interests of clients at all times.

⚖️ Insider Trading
Illegal trading based on material nonpublic information.

⚖️ Churning
Excessive trading in a client’s account primarily to generate commissions.

⚖️ Selling Away
Engaging in private securities transactions without the firm’s knowledge or approval.

🔄 Registration and Disclosure

🗂️ Continuing Education (CE)
Ongoing training required for registered individuals: Firm Element (internal) and Regulatory Element (FINRA).

🗂️ Form ADV
Disclosure document filed by investment advisers, detailing their business practices and conflicts of interest.

🗂️ Form CRS (Customer Relationship Summary)
Brief disclosure document outlining services, fees, and conflicts—required for broker-dealers and investment advisers.

🧠 Exam Tip

Know not just the definition—but also how these terms apply to regulatory rules, violations, and real-world scenarios. Many exam questions will test application, not just rote memorization.

🚀 Want a Full FINRA Vocabulary Masterclass?

Access complete regulatory glossaries, real-world application quizzes, and vocabulary flashcards tailored for your specific exam.

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