STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

FINRA makes available a Content Outline for the Securities Industry Essentials (SIE) Exam for those planning to sit for the exam. This Content Outline describes the subject matter of the SIE Exam. The SIE Content Outline includes Section 3.2.4 which covers Books and Records Regulations, and it encompasses the use of social media to communicate with clients, digital messaging, and internet communications. From time to time, the SEC issues press releases about penalties and charges brought against broker/dealers and advisers. Here is a recent one that imposes penalties on 10 firms for inadequate Record-Keeping of electronic communications, called "Off-Channel Communications." We include the SEC Release here because it demonstrates that a broker or adviser must treat the rules as having real life consequences, potentially bringing serious penalties and large fines for non-observance. Students who plan on sitting for the SIE Exam should pay careful attention to the SEC Release as...

For those who are planning to sit for the Securities Industry Essentials (SIE) Exam to become registered stock brokers, here is an interesting release from the SEC about Insider Trading by someone who the SEC alleges is a "serial insider trader." SEC Charges Florida Investment Adviser a Second Time for Insider Trading Wellington resident agrees to pay a penalty equal to three times his unlawful profits to settle charges FOR IMMEDIATE RELEASE 2023-145 Washington D.C., Aug. 2, 2023 — The Securities and Exchange Commission today filed insider trading charges against Charles Rustin Holzer, a family office executive and former broker who last year settled SEC charges that he traded in options of Dun & Bradstreet Corp. (DNB) on inside information. The SEC’s latest complaint alleges that, in addition to the options trades that were the subject of the SEC’s prior lawsuit, Holzer also placed unlawful trades in DNB stock through offshore accounts that were not disclosed to the SEC ...

Have you looked at FINRA's SIE Exam Content Outline or Test Specifications? You would find that the largest percentage of questions on the SIE Exam comes from Section 2, Understanding Products and Their Risks . Forty-four percent of the questions on your test will come from this Section. For example, Section 2 covers Equity Securities, including knowledge of voting rights, convertible securities, and selling control or restricted stock. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam has detailed coverage of these items. Here is a sample of Bob Eder's treatment: Control Stock (2.1.1) Control stock denotes shares that have been purchased by a control person or by an affiliated person. When a person owns shares in a company in which he/she is an officer, controlling person, termed an "affiliated person," there are also restrictions on the sale of that stock. The SEC calls the shares, "control shares." Only control or affiliated perso...

One of the most important qualities of a registered securities representative is never to recommend that a customer or client purchase or sell any security unless the recommendation is suitable for the client. Specifically,  FINRA has established a three-fold prong for observing the Suitability rule. There are three questions that a SIE candidate must ask himself/herself in determining Suitability: 1.     Is the security suitable in itself? In other words, would a reasonable person determine that the security incorporates real and reasonable value? 2.     Is the security recommendation suitable for this particular customer? A security recommendation may be highly reasonable for 90 percent of a rep's customers, but highly unreasonable for the remaining 10 percent. 3.     Finally is the recommendation suitable in terms of quantity? This quantitative evaluation means that a 100 shares may be suitable for this customer Mr. Jones or Ms. Smith...

  Planning to take the SIE Exam shortly? Don't neglect Economic Factors, such as Monetary and Fiscal Policy. You need to be able to define these, and have knowledge about how they differ. How do I know this? FINRA publishes a Content Outline for the Securities Industry Essentials Exam, and Section 1.3.1 of the Content Outline specifically mentions Monetary and Fiscal Policy. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam discusses the differences between Fiscal and Monetary Policy. Here is a sample of Bob Eder's discussion: Fiscal Policy                                                                (1.3.1) The budget for the United States is set by Congress. Congress decid...

Facing the Securities Industry Essentials (SIE) Exam? Then be prepared for questions on the Federal Reserve Bank and Economic Factors. FINRA'S SIE Exam Content Outline lists Economic Factors under Section 1.3.1. Therefore, FINRA is telling us that these topics may very well be asked on your SIE Exam. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam covers the Fed, Open Market Activities, and various economic factors, such as interest rates. Here's a sample of Bob Eder's treatment of these economic factors: Federal Open Market Committee (FOMC) (1.3.1) Members of FOMC The FOMC is composed of the seven Fed governors, and the president of the Federal Reserve Bank of New York, plus four other Fed bank presidents, selected on a rotating basis from the other 11 Federal Reserve Banks.       FOMC Meets Every Six Weeks The FOMC meets approximately every six weeks to decide whether to increase the money supply, decrease it, or leave it unchanged. The...

When preparing for the Securities Industry Exam (SIE), don't overlook Municipal Fund Securities. More than one SIE candidate has sat for test only to be surprised that there were questions on Municipal Fund Securities. First of all, you need to know the different types of these securities, such as 529 Plans, Local government investment pools, and ABLE accounts. Then you need to know the different characteristics of each of these three types. How do I know that the SIE Exam contains questions on Municipal Fund Securities? I know this because FINRA's Content Outline for the SIE Exam specifically identifies these securities in Section 2.1.5 as covered by the test. Bob Eder in his Study for the Securities Industry  Essentials Exam (SIE) discusses Municipal Fund Securities in detail. Here is a sample of Bob Eder's treatment: Municipal Fund Securities                         ...