Series 39 study guide
Series 39 · Work through your exam, one topic at a time.
The Series 39 - formally the Direct Participation Programs Principal Qualification Exam, or "DP" - is a FINRA principal-level qualification exam that tests whether an entry-level principal can perform the supervisory job of a direct participation programs principal. It is built for people who supervise a broker-dealer's DPP business: the exam measures knowledge of the rules and statutory provisions that apply to supervisory management of a firm whose products are limited to direct participation programs. The Series 39 study guide has 3 sections and about 1,706 words.
01Structure and Regulation of Direct Participation Program (DPP) Offerings
A direct participation program is an entity - usually a limited partnership or limited liability company - that is not taxed at the entity level, so income, gains, losses, deductions and credits flow through to the owners. Candidates must sort program types quickly: real estate (raw land, construction, income-producing property), oil and gas (exploratory, developmental, income), equipment leasing, and other finite-life ventures.
373 words, about 2 min02Sales Supervision, General Supervision of Employees, Regulatory Framework of FINRA
Before a DPP order is accepted, the supervisor must answer one question: can this customer afford to lose this money and wait for it? The tools are Rule 2090 (know your customer), Rule 2111 (reasonable-basis, customer-specific and quantitative suitability), and Rule 2310, which bars member participation unless the firm has reasonable grounds to believe the customer can realize the program's benefits and has net worth sufficient to sustain the risks, including loss of principal and lack of liquidity.
1,010 words, about 5 min03Compliance with Financial Responsibility Rules
Securities Exchange Act Rule 15c3-1 sets minimum net capital: generally 250,000 for a firm carrying customer accounts, 100,000 for a firm that does not, and a much lower amount for a firm that never holds customer funds or securities and meets the rule's narrow conditions. Rule 15c3-3 requires the firm to maintain possession or control of customer securities and to compute the reserve formula, keeping required funds in a special reserve bank account.
323 words, about 2 min