What Is the Series 62 License and What Does It Allow You to Do?

The Series 62 license is a credential for individuals working in corporate securities sales. Administered by the Financial Industry Regulatory Authority (FINRA), it is required for professionals trading stocks, bonds, mutual funds, and other investment products. Obtaining this license demonstrates knowledge of regulations, market structures, and best practices necessary for handling corporate securities transactions.

Earning the Series 62 requires passing an exam that tests proficiency in key financial concepts. Understanding the license’s scope and maintenance requirements is essential for professionals in this field.

Sponsorship and Eligibility

Candidates must be sponsored by a FINRA-member firm to take the Series 62 exam. This means individuals cannot register independently but must be associated with a brokerage or financial institution that is a FINRA member. The sponsoring firm submits a Uniform Application for Securities Industry Registration or Transfer (Form U4) on behalf of the candidate, initiating registration and allowing them to schedule the exam.

Sponsorship ensures firms vet candidates before they assume responsibilities related to corporate securities. Firms typically conduct background checks, reviewing criminal history, financial disclosures, and employment records. Past regulatory violations or financial misconduct can affect eligibility, as FINRA and firms assess whether an individual meets the integrity and trustworthiness standards required for securities professionals.

Candidates must be at least 18 years old. While there are no formal education prerequisites, many firms prefer candidates with a background in finance, economics, or business. Some firms require internal training programs before the exam to ensure candidates understand securities regulations and market operations.

Exam Structure and Components

The Series 62 exam evaluates candidates on corporate securities, investment banking practices, and regulatory compliance. Administered by FINRA, it consists of 115 multiple-choice questions with a 150-minute time limit.

The exam covers debt and equity securities, including characteristics, pricing, and risks. Candidates must understand different types of bonds, preferred stock, and common stock, as well as how these instruments are issued and traded. This section also addresses yields, interest rate risk, and dividend distributions.

Another section examines the underwriting process and capital markets, including the roles of investment banks in public offerings, private placements, and secondary market transactions. Candidates must be familiar with regulations such as the Securities Act of 1933 and the Securities Exchange Act of 1934, which establish disclosure requirements and anti-fraud provisions.

Regulatory compliance and ethical considerations are also tested, covering FINRA rules, SEC regulations, and industry practices that ensure fair market operations. Topics include insider trading restrictions, reporting obligations, anti-money laundering (AML) measures, and suitability standards that require financial professionals to recommend investments aligned with a client’s financial goals and risk tolerance.

Passing Criteria

To pass the Series 62 exam, candidates must score at least 70%, answering at least 81 out of 115 questions correctly. Each question carries equal weight, and there is no penalty for incorrect answers.

While FINRA does not mandate formal coursework, most candidates use study materials from providers like Kaplan or Securities Training Corporation. These resources typically include practice exams, study guides, and question banks designed to mirror the exam’s difficulty and structure. Many test-takers find that focusing on practice questions helps them identify weak areas and improve their ability to apply regulatory concepts.

The exam is administered at Prometric testing centers or through FINRA’s online proctoring system, which requires strict adherence to testing protocols. Candidates must present valid identification, comply with security measures like audio and video monitoring, and refrain from using external materials. Any violations can result in immediate disqualification and potential disciplinary action from FINRA.

Permitted Securities Activities

Holding a Series 62 license allows professionals to sell and trade corporate securities, including corporate stocks, bonds, and rights offerings. This credential is designed for individuals facilitating transactions related to corporate debt and equity instruments, enabling them to work as registered representatives or traders at brokerage firms.

A registered representative with this license can assist in the distribution of new securities issued by corporations, often working alongside investment banking professionals in underwriting efforts. This may involve explaining offering details to potential investors, coordinating with issuers to ensure regulatory compliance, and handling transactions for institutional and retail clients. However, the Series 62 does not authorize individuals to trade municipal securities, options, or commodities, which require separate licenses such as the Series 7 or Series 79.

Renewal and Ongoing Requirements

Maintaining an active Series 62 license requires compliance with FINRA’s continuing education and registration requirements. The license remains valid as long as the individual is registered with a FINRA-member firm. If a registered representative leaves their sponsoring firm and does not associate with another within two years, the license expires, requiring requalification through retaking the exam.

FINRA mandates continuing education to keep representatives informed about regulatory changes and industry developments. This consists of two components: the Regulatory Element and the Firm Element. The Regulatory Element is an online training program administered by FINRA, required within 120 days of a representative’s second registration anniversary and every three years thereafter. It covers rule updates, ethical considerations, and compliance best practices. The Firm Element is firm-specific, requiring broker-dealers to design training programs tailored to their business model and regulatory obligations. Firms assess employees’ training needs annually to ensure representatives remain proficient in relevant securities laws and market practices.

Failure to meet these renewal and education requirements can result in suspension or termination of registration. Representatives who do not complete their continuing education on time may be prohibited from conducting securities transactions until they fulfill their obligations. Firms are responsible for tracking their employees’ compliance, and noncompliance can lead to internal disciplinary actions, including fines or employment termination.

Consequences of Noncompliance

Failing to comply with FINRA regulations can lead to penalties ranging from fines and suspensions to permanent bars from the securities industry. The severity of consequences depends on the nature of the violation, whether it involves unregistered activity, misrepresentation, or failure to meet continuing education requirements.

Unregistered securities activities, such as executing trades without an active Series 62 license, can result in disciplinary action by FINRA and the SEC. Firms must ensure their representatives maintain proper licensing, and failure to do so can lead to firm-wide penalties. In cases of willful violations, individuals may face personal fines, suspension, or even criminal charges if fraud or misconduct is involved. Additionally, noncompliance with continuing education requirements can result in a representative being placed on inactive status, preventing them from engaging in securities transactions until they rectify the issue.