Series 82 cheat sheet

Rule 506(b) prohibits general solicitation and general advertising; offers may be made only to purchasers with a pre-existing substantive relationship with the firm.

Rule 506(c) permits general solicitation if all purchasers are accredited investors and the issuer takes reasonable steps to verify accredited status.

A pre-existing substantive relationship exists when the firm has enough information to evaluate the customer's financial circumstances and sophistication before the solicitation.

Cold calling must comply with FINRA Rule 2210 and the FTC Do Not Call Registry; firms must maintain do-not-call lists and honor requests within a reasonable time.

Finder's fees paid to unregistered persons for soliciting investors may violate Section 15(a) of the Exchange Act; only registered broker-dealers may receive transaction-based compensation.

Retail communications are written or electronic communications distributed to more than 25 retail investors within any 30-day period; they require principal approval before first use.

Seminar presentations must be fair and balanced, include risk disclosures, and not omit material facts; records of seminar materials must be retained.

Social media posts are communications subject to FINRA Rule 2210; static posts are treated as retail communications, while interactive posts may be correspondence.

The Customer Identification Program requires collection of name, date of birth, address, and identification number, and verification of identity within a reasonable time using documentary or non-documentary methods.

An accredited investor individual has net worth over $1 million excluding primary residence, or income over $200,000 ($300,000 joint) in each of the last two years.

A qualified purchaser includes an individual with at least $5 million in investments, a family company with $5 million, or a trust with $5 million not formed to acquire the securities.

Regulation Best Interest requires broker-dealers to act in the best interest of retail customers, considering reasonable-basis, customer-specific, and quantitative suitability factors, and to disclose material conflicts.

FINRA Rule 2111 suitability requires a reasonable basis to believe a recommendation is suitable based on the customer's investment profile, including risk tolerance, time horizon, and liquidity needs.

For senior investors, firms should use trusted contact persons and may place temporary holds on disbursements when financial exploitation is suspected under FINRA Rules 2165 and 4512(a)(1)(F).

Retail account information must be updated at least every 36 months; changes in investment objectives require customer confirmation.

For options accounts, firms must obtain a signed options agreement and approve the account before trading; the agreement must be delivered within 15 days of approval.

FINRA Rule 2210 classifies communications as correspondence (25 or fewer retail investors), retail communications, or institutional communications, each with different review and approval requirements.

Retail communications must be approved by a registered principal before first use; correspondence is subject to post-use review and supervision.

Private placement memoranda must include risk factors, use of proceeds, management bios, financial statements, and investor suitability standards; firms must conduct reasonable due diligence.

Recommendations in private placements must have a reasonable basis; firms should review the issuer's financials, management, and offering terms.

ACATS transfers customer accounts between broker-dealers; the receiving firm submits a transfer instruction and the delivering firm must validate within one business day.

Records of communications relating to recommendations must be retained for at least three years, the first two in an easily accessible place under FINRA Rule 4511.

Form U4 is used to register representatives; disciplinary actions must be disclosed within 30 days of the event and firms must amend the form promptly.

Form U5 is filed within 30 days of termination and includes the reason for termination; it is used to terminate registration.

Customer complaints must be recorded and retained for four years; a complaint log is required under FINRA Rule 4530.

Subscription agreements must be completed and signed by the investor; firms must verify accredited investor status for Rule 506(c) offerings.

Confirmations must be sent at or before completion of the transaction and include security description, price, commission, and settlement date under SEC Rule 10b-10.

For private placements, funds are often held in escrow until the minimum offering amount is raised; if the minimum is not met, funds must be returned promptly.

Delivery versus payment requires payment upon delivery of securities; free delivery allows delivery without payment and is riskier.

Blue sky laws require issuers to comply with state securities registration or exemptions; FINRA Rule 5123 requires filing of private placement materials with FINRA within 15 days of first sale.

Trade settlement for most securities is T+2; private placements may have different closing dates specified in the subscription agreement.

Order tickets must include the time of receipt, terms, and account identification; records must be retained for three years.

Customer instructions must be verified, including identity and authorization, before executing transactions; verbal instructions should be documented.