Securities Industry Essentials (SIE) ExamOverview of Regulatory FrameworkMedium
A broker-dealer firm is onboarding a new employee who will be performing various administrative tasks, including processing new account applications and handling client correspondence under direct supervision. Which of the following statements is true regarding this employee's registration requirements?
- AThe employee is exempt from registration as long as they do not solicit business or receive commissions.
- BThe employee must obtain a Series 99 registration because they are processing new account applications.
- CThe employee must be registered as an Investment Adviser Representative (IAR) if they provide any financial advice.
- DThe employee must be registered as a Series 7 representative due to handling client correspondence.
Show answer & explanationAnswer & explanation
Correct answer: A. The employee is exempt from registration as long as they do not solicit business or receive commissions.
Employees performing purely clerical or ministerial duties, such as processing applications or handling correspondence without soliciting business or receiving transaction-based compensation, are generally exempt from registration.
Why the other options are wrong
- B. Series 99 (Operations Professional) is for individuals involved in operations functions, but not strictly required for purely administrative tasks under supervision.
- C. IAR registration is required for those who provide investment advice for compensation, which is not described here.
- D. Series 7 is for general securities representatives who solicit and execute transactions, not administrative staff.
Clerical/Ministerial Registration Exemption
Employees of broker-dealers performing only clerical or ministerial duties, without soliciting business, advising clients, or receiving transaction-based compensation, are generally exempt from FINRA registration.
- Exemption applies to administrative tasks.
- No solicitation or investment advice allowed.
- No transaction-based compensation.
Memory trick: No Sales, No Advice, No Commission = No Reg.