The Series 79 exam is a lighter version of the Series 7 exam, but don't be fooled: The exam is deceptively difficult. As of Oct. 1, 2018, the exam was restructured, and it is now a co-requisite along with the Securities Industry Essentials (SIE) exam. 

The Ideal Candidate

The Series 79 exam is for those looking to work in the area of investment banking. Before 2009 the more popular exam, the Series 7, was required to be a general broker, but some representatives found they were only performing investment banking activities, even though investment banking is only a small portion of the Series 7 exam.

Most retail securities firms provide a different set of functions and services than investment bankers, so the Series 7 testing material covered topics beyond the duties of most investment bankers. Because of these concerns, a job analysis was conducted and a committee of investment bankers agreed on the major duties, job functions and tasks associated with those specifically working in investment banking.

Besides being told by an employer, there are specific areas of finance where one will likely need this license. FINRA Rule 1220(b)(5) defines the different types of representative categories, and section (i) Limited Representative-Investment Banking gives a more than thorough explanation of the areas.

In 2009 the Securities and Exchange Commission (SEC) approved the more focused Series 79 exam, also known as the Investment Banking Representative Qualification Examination. This exam is also referred to as the "Limited Representative" Investment Bankers' exam because it was designed for entry-level investment bankers.


The Basics of The Series 79 Exam

Series 79 Exam Prerequisites

The Series 79 exam satisfies the Series 24 prerequisite as a representative exam. However, because the Series 79 focuses on investment banking, the Series 24 General Securities Principal will be limited to investment banking supervisory responsibilities if one only has the Series 79.

Generally, testers will need their Series 79 even if they already have the Series 7. This is one of the only cases where the Series 79 can be used as a prerequisite instead of the Series 7.

Generally, if one works in either Debt or Equity or Mergers and Acquisitions–either as a worker or a supervisor–they might need the Series 79.

Debt or Equity Offerings

Debt or equity activities that might require a series 79 include:

  • Pricing of securities in the debt and equity offerings
  • Origination, which deals with equity capital markets and debt capital markets
  • Underwriting
  • Marketing
  • Structuring
  • Syndication
  • Managing the allocation and stabilization activities of offerings

Mergers & Acquisitions and Restructuring

Some responsibilities that a Series 79 might be required for under this category may include:

  • Tender offers
  • Selling asset
  • Corporate reorganization or divestitures
  • Transactions involving business combinations, which might include rendering opinions solvency and fairness opinions

Series 79 Exceptions

Even if the employee participates in these investment banking activities, they might not need a Series 79 if the exposure is very limited. Also in some jobs where new associated employees rotate among different business areas and departments for training purposes, there is some leeway. These workers will be given a six-month grace period from when they start working in investment banking activities. Normally, working in these areas would trigger the need to register as an investment banking representative, but this exception allows firms to train employees. For a complete guide to exemptions, look at NASD Rule 1032 (i).

The Actual Exam

The exam is made up of 75 multiple choice questions and is completed on a computer. Candidates are given 150 minutes to complete the exam. The exam is done on the computer so the results are given right after the exam as a pass or fail, as well as a breakdown of the performance in each section.

The exam is administered via computer. A tutorial on how to take the exam is provided prior to taking the exam. Each candidate’s exam includes 10 additional, unidentified pretest items that do not contribute toward the candidate's score. 

Candidates must be sponsored by a FINRA member before they can take the exam. Requirements for eligibility include taking the appropriate qualification examination. Candidates need to answer 73% of questions correctly, not including the 10 additional questions. Also, the SIE exam is a co-requisite to restructured Series 79 exam. Both the Series 79 and SIE exams must be passed, although not at the same time.

Test Sections

There are three sections to the test. The 10 additional questions are scattered throughout at random.

Collection, analysis, and evaluation of data (49%): This section is the largest with 37 questions, and it includes finding the relevant data and understanding where you will need to look to get it. For example, knowing what will be in proxy statements Form 14A or Form 4s for beneficial ownership of directors. This section also goes into communicating with different departments and clients, using metrics and ratios, and analyzing trends to evaluate what you have found in the firm and sector data. Finally, this section wraps up with understanding due diligence activities, such as knowing the buy and sell side due diligence and regulatory requirements.

Underwriting/new financing transactions, types of offerings and registration of securities (27%): This section has 20 questions and deals with regulations of filing and registering securities. This includes forms (such as the prospectus), rules and required financial statements. This section also covers the distribution of marketing materials and many associated rules.

Mergers and acquisitions, tender offers and financial restructuring transactions (24%): This section has 18 questions and goes into the buy side and sell side transactions, the fairness opinion and of course the SEC rules and regulation. This section also goes into tender offer regulations and financial restructuring.