Quick Answer
Registered persons and non-registered persons at a member firm have different allowed activities. Registered persons can solicit business, make recommendations, and execute trades with customers. Non-registered persons handle only clerical and administrative functions; they cannot accept customer orders, discuss specific securities, or make recommendations to clients.
A key distinction in the securities industry is between people who are registered and people who are not. This status determines exactly what activities a person may perform at a member firm.
What Makes Someone "Registered"?
- A registered person is an individual who has:
- Passed a qualifying exam (Securities Industry Essentials (SIE) + a top-off exam like the Series 7 or Series 6)
- Been registered with FINRA through a member firm
- Filed Form U4 (Uniform Application for Securities Industry Registration)
- A non-registered person (also called an "associated person not registered") is someone affiliated with a member firm but who does not hold an active registration
- The key takeaway: registration status controls what you're allowed to do
Permitted Activities Comparison
| Activity | Registered Person | Non-Registered Person |
|---|---|---|
| Solicit customers for securities transactions | Yes | No |
| Provide investment recommendations and advice | Yes | No |
| Execute securities transactions on behalf of clients | Yes | No |
| Supervise other registered representatives | Yes | No |
| Open new customer accounts | Yes | No |
| Perform clerical and administrative functions | Yes | Yes |
| Accept a customer order, solicited or unsolicited | Yes | No |
| Distribute pre-approved marketing materials | Yes | Yes |
| Discuss the merits of a specific security with a customer | Yes | No |
| Negotiate trades | Yes | No |
Think of it this way: If the activity involves persuading a customer or making decisions about their money, it requires registration. If it is purely mechanical (filing paperwork, passing along a message), it does not.
Non-Registered Person Boundaries
Non-registered persons are limited to clerical and administrative functions:
- They cannot accept a customer order, solicited or unsolicited, under any circumstances. If a customer calls in with a trade, the non-registered person must transfer the call to a registered person without accepting, confirming, or recording any order details
- They can distribute marketing materials, but only if the materials have been pre-approved by a principal
- They cannot:
- Solicit business
- Make recommendations
- Negotiate trades
- Discuss specific securities with customers
- Accept any customer order, even one the customer initiated
Exam Tip: Gotchas
- A non-registered person who discusses the merits of a specific security with a customer is effectively "selling" and must be registered. Even casual conversations about individual stocks can trigger registration requirements. On the exam, look for scenarios where a non-registered employee crosses this line.
- Accepting an order is never a clerical function, even when the customer initiated it and even if the plan is just to hand it to a registered person. The correct move is to transfer the call, not to write anything down.
- Distributing marketing materials is allowed for non-registered persons, but only pre-approved materials. Unapproved materials cross the line into sales activity.
What Should You Check on Exam Day?
- Can you list the activities a non-registered person is allowed to perform at a member firm?
- Do you know why a non-registered person can never accept a customer order, even one the customer initiated?
- Can you explain when distributing marketing materials is allowed for a non-registered person?
- Do you know why discussing the merits of a specific security requires registration?
- Can you state what document a registered person must file to become registered?