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Canada: FINRA Proposes New Registration Category For Investment Bankers

Date: Wednesday, April 8, 2009
Author: Jeremy Grushcow & Stephanie Shendale, Ogilivy Renault

The Financial Industry Regulatory Authority, Inc. (FINRA) has proposed a new limited representative registration category for investment banking professionals doing business in the United States. The rule (NASD Rule 1032(i)) also prescribes the registration requirements for those who supervise investment banking activities.

FINRA believes the creation of this new customized limited registration category will result in enhanced investor protection and member compliance. The proposed rule is also intended to allow FINRA members to allocate their training resources more efficiently.

Current Rule and Proposed New Category

Currently investment bankers who are registered representatives of FINRA members must pass the broad General Securities Representative (Series 7) Examination (or certain designated equivalent examinations) unless the person's activities fall within a more limited category of registration for which a more targeted examination is prescribed.

The proposed rule creates the new representative registration category of Limited Representative-Investment Banking which applies to persons who carry out investment banking activities, including those who work on equity and debt capital markets and syndicate desks.

The proposed new category of registration includes persons whose activities primarily involve advising on or facilitating:

  • debt or equity securities offerings through private placement or public offering (including, but not limited to, origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization of such offerings); and
  • mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions.

A specialized qualification exam will be developed by FINRA for those individuals who perform only these activities and will replace the Series 7 examination currently required.

The proposed registration category does not cover individuals whose investment banking work is limited to public (municipal) finance offerings, direct participation program offerings, or effecting private securities offerings, as these activities are included under other categories of registration.


Existing investment bankers who are already registered under the current requirements (Series 7 registrants, or those who have passed United Kingdom (Series 17) or Canada (Series 37/38) Modules of the Series 7 examination, or those who hold an LR-Corporate Securities (Series 62) registration) will not be required to write the new examination, provided they "opt in" to the new registration category within six months of the rule's effective date. If they opt in, they will also continue to retain their current registration. If a registrant does not opt in within the six-month period and wishes to engage in the specified investment banking activities described above, he or she must pass the new examination.


Individuals who wish to act as a general principal for the investment activities described above will be required to obtain the Limited Representative-Investment Banking registration (either by opting in as described above, or by passing the new qualification examination) and must also pass the General Securities, Principal Examination. Those wishing to act as general principal for broader securities-related activities will still be required to pass the relevant qualification examination.


A copy of the proposed rule can be accessed here. The changes will be implemented 90 days following the effective date of a future proposed rule which will establish the qualification examination for the new registration category.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.

Ogilvy Renault is the International Legal Alliance's Canadian Gold Award winner for 2008 in M&A and Corporate Finance.

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