Registered vs. Non-Registered Persons
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 unsolicited orders (if immediately forwarded to a registered person) | Yes | Yes |
| 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 can accept unsolicited customer orders, but only if they immediately forward the order to a registered person
- 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
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.
- Forwarding an unsolicited order is permitted for non-registered persons, but only if they forward it immediately to a registered person. Any delay could be treated as "handling" the order.
- Distributing marketing materials is allowed for non-registered persons, but only pre-approved materials. Unapproved materials cross the line into sales activity.