What is Series 82
The Series 82 is a certification giving financial professionals representing a sponsor organization the ability to transact private securities for clients.
BREAKING DOWN Series 82
The Series 82 is a certification focused on private securities transactions. Its creation was mandated under the Gramm-Leach-Bliley Act of 1999. In 2001, the Securities and Exchange Commission (SEC) effected rules that separated the Series 82 transactional abilities from under the umbrella of the Series 7 and the Series 62. The Gramm-Leach-Bliley Act repealed and revised many of the legislations from the Glass Steagall Act, which broadened the service capabilities for commercial banks. As a result, commercial banks could offer a more diverse set of services and could more easily partner with broker-dealers to provide securities transactions to customers. The Series 82 was created from this movement and established an individual license focused just on the transactions of private securities by registered representatives.
The Series 82 Exam
The Series 82 Exam, also known as the Private Securities Offerings Representative Exam, is sponsored by the Financial Industry Regulatory Authority (FINRA) and administered at test centers across the nation. The exam focuses on private securities and private placement transactions.
The Series 82 certification can be achieved and used along with other FINRA-endorsed licenses for registered representatives. The Series 82 provides clearly delineated due diligence and testing for the private securities market, adding additional credibility to the private securities market’s operational activities and trading efficiency. The Series 82 allows representatives to transact private placement securities as part of a primary offering.
The test consists of 100 multiple choice questions taken over 150 minutes. A score of 70% or better is required for passing. The Series 82 does not have any preliminary prerequisites and only requires that individuals be sponsored by an SEC-registered organization.
The test includes the following four sections of material:
Section One — Characteristics of Corporate Securities
This section fully encompasses all types of securities in the market. It includes details on equities, debt, asset-backed securities, real estate investment trusts, common stock and preferred stock, as well as rights and warrants. It also includes information on investment companies, their structuring, and different fund variations.
Section Two — Regulation of the Market for Registered and Unregistered Securities
Section two goes into detail on the private placement mechanisms involved with securities. It also discusses underwriting commitments, financing proposals, distribution, and pricing. Other topics included in section two include the marketing and advertising of private placements, trading and transactions, and regulations under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Section Three — Analyzing Corporate Securities and Investment Planning
Section three tests on the analysis of corporate securities. This analysis includes balance sheet income statements and cash flow statements for equity securities. It also comprehensively includes debt analysis, with such topics as bond ratings, call provisions, interest rate risk, and yield curves. Section three also includes comprehensive market topics such as fiscal policy, the Federal Reserve Board, and the economy. Lastly it discusses investment planning features such as suitability, investment objectives, constraints, risk, portfolio construction, and tax treatment.
Section Four — Handling Customer Accounts and Industry Regulations
Section four discusses account documentation and regulatory expectations. This encompasses client account forms, investment disclosures, documentation, regulatory filings with the Securities and Exchange Commission, and FINRA rules.
Series 82 Licensing
The Series 82 is very broad in its scope, requiring licensees to have a thorough understating of how all types of equity, debt, and other securities are analyzed, underwritten, and offered to investors. Private securities and private placements are investments that are only offered to a select group of investors. The structuring of their offerings, however, follows similar structures and techniques used in the public markets.