Supervisory Systems - Continuing Education

NASD (now known as FINRA) Rule 1120 describes the continuing education requirements for registered representatives and principals. There are two parts to these requirements - the Firm Element and the Regulatory Element.

Firm Element
All registered persons who have direct contact with customers in their normal course of business are subject to the Firm Element. This is designed to keep registered representatives and principals updated on job and product related subjects. Each member firm must prepare an annual training plan based on the firm's line of business, regulatory developments and new products.

The FINRA permits the firms to create and administer their own programs, subject to requirements, including:

  • The firms must evaluate their training needs at least annually and use the evaluation to create written training plans.
  • Records must be kept indicating dates of completion of the Firm Element.
  • The plan must cover investment features and associated risk factors, suitability and sales practices, as well as ethics and professional responsibility.

Regulatory Element
This is an industry-wide program that requires all registered persons to complete a specific computer-based training session on a set schedule. If the session is not completed within the required window of time, registration becomes inactive and the person is not permitted to conduct any securities business.

The training session must occur within 120 days of the registered person's second anniversary of initial registration, and then every three years thereafter. The Regulatory Element material is determined by the FINRA and is based on the type of registration the person holds.

Any registered person who has been continuously registered for more than 10 years (as of July 1, 1998) is exempt from the Regulatory Element, as long as they are not subject to FINRA disciplinary action.

Complaint Handling
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