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
  • Had a Form U4 (Uniform Application for Securities Industry Registration) filed on their behalf by the member firm
• 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
• A registered representative (someone registered under a representative category, such as the Series 6 or Series 7) and a registered principal (someone registered under a principal category, such as the Series 24) are both "registered persons," but they are not interchangeable: only a registered principal may supervise other registered representatives

Permitted Activities Comparison

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 transfers the call to a registered person. The one narrow exception: when an appropriately registered person is unavailable, the employee may occasionally write down the order details, and a registered person must contact the customer to confirm them before entering the order
• They can distribute marketing materials, but only if the materials have been pre-approved by a principal
• They can handle paperwork, such as giving a new customer the account-opening forms, and may contact prospects for three purposes only:
  • Inviting them to a firm-sponsored event where registered persons make any presentation or solicitation
  • Asking whether they want to discuss investments with a registered person
  • Asking whether they want investment literature from the firm
• They cannot:
  • Solicit business, including asking a prospect to open an account
  • Pre-qualify a prospect by asking about financial status, investment history, or investment objectives
  • 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. Writing the details down is allowed only occasionally, when an appropriately registered person is unavailable, and only if a registered person then confirms them with the customer before entering the order.
• Handing a new customer the account-opening forms is paperwork, so a non-registered person may do it. Asking a prospect about income, net worth, investment history, or objectives is pre-qualifying, which needs registration.
• Distributing marketing materials is allowed for non-registered persons, but only pre-approved materials. Unapproved materials cross the line into sales activity.
• A registered representative cannot supervise other registered representatives on the strength of that registration alone. Supervision requires registration in a principal category, such as the Series 24 (General Securities Principal). On the exam, watch for a distractor that lets a plain "registered person" step into a supervisory role.

What Should You Check on Exam Day?

• Can you list the activities a non-registered person is allowed to perform, and tell handing over account forms apart from pre-qualifying a prospect?
• 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?
• Do you know why supervising other registered representatives requires a principal registration, and not just registered-representative status?