What it means
In the securities industry, a representative needs a licence matching what they sell. A person selling only corporate stocks and bonds did not need to be licensed for options, mutual funds or commodities.
The Series 62 was designed for that narrower role. The exam tested the basic features of common and preferred shares, corporate bonds, new issues, the markets where they trade, customer account rules and the standards of fair dealing.
It was a way to qualify for sales work without the study load of the full general exam. For a business reader, the interesting point is how licences define permission.
A registration is a statement about what its holder is allowed to do, and firms, regulators and clients all rely on it. If a representative moves into a product outside their registration, they need additional qualifications.
FINRA has restructured its programme over the years, adding the entry-level Securities Industry Essentials exam and combining or retiring several older qualifications. Because of this, anyone relying on an old series number should check FINRA's current list instead of assuming the historic description still applies.
The general rule remains: ask what a salesperson is authorised to sell, and what supervision they receive. These questions are as relevant when a company hires an adviser to help with its share plan as they are when a private investor opens an account.
A useful lesson for managers is the idea of scope creep. Over time, a representative's duties can grow beyond what their registration permits, particularly when a firm adds products or the representative takes on new clients.
A yearly review that matches each person's registrations with their actual activity is a cheap way of catching drift.
In practice
Real-world examples.
Example
A brokerage that specialises in company shares and bonds hires a graduate to cold-call prospects. The compliance team checks the registration available for a corporate-securities-only role. They plan her training around that scope. She also asks that the training plan is approved in writing before she begins to speak to prospective clients.
Example
A representative at an older brokerage asks to sell mutual funds as well. His manager points out that his current registration does not cover them. He enrols in the exam that covers funds before he takes any orders. His manager records the date on which the extra qualification was passed, so the firm can show when he became eligible to take fund orders.
Example
A company's finance director reviews the advisers who will run the staff share plan. She asks each firm to list the registrations its representatives hold. She picks a firm whose staff are qualified for everything the plan will involve. She also keeps a copy of the replies in the file, so that the choice of adviser can be justified to the board later.
Case study
Seen in the real world.
Birchwood Capital is an illustrative, fictional brokerage that employed a number of representatives under older, narrow registrations. When the firm expanded into funds and options, the operations manager audited who was allowed to sell what. Some of them had sold units in funds for years, and nobody had noticed because the trading system did not check registrations against products.
The audit found that nine representatives had been taking orders in products outside their registrations. The firm stopped the activity, reviewed the trades, paid back fees of about $14,000 to affected customers and arranged for the nine to take the additional exams. The operations manager then asked the systems team to add a control that blocks any order in a product that is outside the representative's registrations.
The illustrative lesson is that every new product line should trigger a review of registrations, because an unqualified sale is a compliance breach even if the customer is happy.
Watch out
Common mistakes.
- Assuming that one licence covers every investment, when each registration permits a defined set of activities.
- Relying on an old series number without checking whether FINRA has since changed or retired it.
- Letting a representative sell a new product before the extra qualification is in place.
Questions
People also ask.
What did Series 62 cover?
It covered the sale of corporate securities such as shares and bonds, without extending to options, funds or commodities.
Is it still used?
FINRA has revised its qualification programme more than once, so you should check its current list before relying on this series number. Public regulatory databases and the FINRA website show which exams are currently offered and how they are described.
How can I check what a representative is allowed to do?
Public regulatory databases list the registrations and exams held by individuals and firms. The same databases show a person's employment history and any disciplinary events, which is useful before choosing an adviser.
From the founder's library
Take it further with the book.
Build your financial confidence beyond this definition. Shihan's full-length guide, Accounting Fundamentals, takes the same plain-English approach and turns it into a complete, practical playbook for non-finance managers, business owners and students - with chapter-end quiz answers and presentation slides included.
25% off with code MMHQ25, applied at checkout. Priced in USD - checkout may show the equivalent in your local currency.
View the book and save 25%Related