Will A Bankruptcy Disqualify Me For SEC Licensing
My question involves bankruptcy in the state of: California
I am in a financial position in which Ch 7 is my best solution.
I am studying for my Series 6 & 63. I am trying to find out if a BK will render me statutorily disqualified from obtaining my Securities & Exchange Licensing.
Re: Will A Bankruptcy Disqualify Me For SEC Licensing?
According to FINRA,
Quote:
Quoting I'm considering filing for bankruptcy. Would FINRA rules prohibit me from obtaining a securities license and working for a broker-dealer if I file for bankruptcy?
Answer: No. FINRA By-Law, Article III, Section 4 outlines events that would disqualify an individual from being associated with a FINRA member firm. However, filing for bankruptcy is not one of them.
Information on "disqualifying" events and for steps that members can take to sponsor the proposed association with a disqualified person is available on our Web site. Bankruptcy filing is required to be disclosed on the Form U4 (see Item 14K on Form U4), and this information is publicly available upon request through FINRA BrokerCheck.
Many of the answers in our FAQ database were created prior to the consolidation of NASD and NYSE Member Regulation into the Financial Industry Regulatory Authority (FINRA). FINRA is currently working toward a single, consolidated rulebook. We will also update our FAQ database. In the interim, the information provided - and rule(s) cited - in this FAQ refer to the NASD rulebook. Firms that were dually registered with NASD and NYSE Regulation prior to the consolidation should carefully consider whether similar NYSE rules apply.
Re: Will A Bankruptcy Disqualify Me For SEC Licensing?
This is outside the scope of the law (and I am not a lawyer). I studied for the series 6 and 63 exams years ago, but decided that selling insurance products was not a good future for me (it was for a lot of friends and their parents!)
That having been said...
The companies that I interviewed with had a lot of pre-employment tests before they would even interview face-to-face. Of the tests I took I found that all of them had sections regarding personal finance and keyed on 1) Your net worth, 2) Your financial solvency, and 3) Your earning potential and what you thought it was with their company.
You might want to talk to people in the industry to see how a bankruptcy would affect your ability to be hired. If you are just selling insurance products it might not be as bad; if you sell stock products then the company may be a bit more sensitive to your insolvency.
Bob
Re: Will A Bankruptcy Disqualify Me For SEC Licensing?
Although I don't think the law will keep you from becoming Series 7 licensed, the brokerage company (that has to sponsor you in order to take the Series 7) might not sponsor/hire you because of your bankruptcy. At least that's the way it was 20+ years ago when I went into the business (6 months before Black Monday!).
Pick up the phone and call your state securities department. They can probably tell you both the law and reality, which isn't always the same thing.
Contact me and I'll be happy to share the ups and downs (no market volatility pun intended) of working for a brokerage company. It's a great way to add stress and insecurity to your future, - especially now during a bear market and a quickly changing business model that brokerages are scampering to develop (i.e. putting lipstick on the pig) - although combining other licenses with a few years of experience in securities sales might have a more low-stress and secure future (if you can survive the first 2 to 5 years in securities sales.
Although I made it, if I'd known what I was getting into I wouldn't have done it. Am I glad now that I did it? Well...yes, but that's not a recommendation to enter this crazy, crazy, crazy business.
Good luck. Whatever you do, talk to a few people with extensive experience in the brokerage business before you jump into the fire.
Both the frying pan and fire can be hotter than hell. And like the man with his head in the oven and his feet in a bucket of ice, says (when you ask him how he's doing), "Well, on average I'm fine." :D
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
Checking with a friend who owns an insurance company. His firm will not hire someone with a recent bankruptcy. They are an independent agent for a large insurance company and sell only that company's products. Their agencies sell both insurance and insurance products, such as annuities.
I didn't have a chance to check with either of the 2 brokers I use.
...and I can tell you that the hiring for brokers is pretty tight right now. Great brokers with good books and the ability to make money in a bear market are in high demand and are in receipt of good bonuses. Others are hogs (cue Jim Cramer sound) being slaughtered.
When I "hired" my first broker I did ask for a copy of his resume and information because I was placing $50,000 with him. I actually got a whole folder on him, including his 800+ credit score and copies of his diplomas to Ph.C.. Later I found out that $50,000 was chump change. At the ripe age of 22, it was more in savings than most of my friends had. A broker does not have to provide a resume ...but there is an SEC law that a broker or his/her firm does have to provide an ADV Form upon request. This form includes information on the broker and will note whether or not the broker has declared bankruptcy!
When you start working with larger customers they WILL care about a recent bankruptcy and an inability for their broker to have maintained his financial house.
I did check Investopedia for info and found 2 articles:
http://www.investopedia.com/articles...ker_credit.asp
http://www.investopedia.com/articles...ghtadvisor.asp
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
A broker is nothing more than a glorified salesperson. I was trained by what was in 1986 the largest brokerage on the planet, who at the time had what was regarded as the best training program in the business. They spent 95% of the time teaching us how to bring new money into the firm and 5% on managing investments.
Brokers are trained to sell packaged products - preferably proprietary packed products. Back then it was mutual funds. Today the packaged product is "managed money." It's all about putting lipstick on the pig.
What a broker learns about managing portfolios comes from experience as it is like any job: You learn to do the job by doing the job with other people's life savings.
The broker is simply an AGENT, period. Marking buy and sell tickets as "unsolicited" was preferred by the firm and "solicited" orders had to have a trail of notes backing it up.
You say $50,000 was chump change. Sometimes it is and sometimes it's not, depending on what type investment the investor let's the broker invest the money in. A $50,000 CD investment might pay the brokerage firm $500. The same amount in a mutual fund, $2,500. The same amount in a variable annuity, $3,750. You see how this works now?
That same brokerage firm today does NOT PAY THEIR BROKER on accounts that have less than $100,000 UNLESS the investment is a proprietary investments. That's why the pig ends up with such red lips. :cool:
I could tell you dozens upon dozens of true stories of what goes on within the walls of a brokerage office. The bottom line is, if possible never use a stockbroker. Take your chance with an EXPERIENCED and INDEPENDENT FEE-BASED investment advisor who receives 100% of his income from client fees.
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
That's some great advice to both me and the original person. I am familiar with putting lipstick on a pig! I love that term. That and "Hogs get slaughtered!"
Thanks,
Bob
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
For clarification, I work for an insurance company. The SEC licensing is to sell their life insurance products.
Many of of the posts were on target, ie; the LAW and COMPANY POLICIES are two different things. The company is the Broker/Dealer and they have to provide the bonding. Regardless of the law they won't bond someone with a BK.
The bottom line is I am producing and they aren't going to let me go. However, since I can't qualify for their bonding I'm not a full fledged employee and my book isn't really mine.
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
I think you'll find that your book is NEVER really yours.
Re: Will A Bankruptcy Disqualify Me For SEC Licensing
[quote=usedbranflakes;209622]That's some great advice to both me and the original person. I am familiar with putting lipstick on a pig! I love that term. That and "Hogs get slaughtered!"
One more thing to consider when choosing to use a stockbroker or a registered investment advisor is that a stockbroker does NOT have to give you advice that is in your best interest. Yes, that's true...he or she is not legally obligated to do so. On the other hand, a RIA is a fiduciary that is legally obligated to work in your best interests 100% of the time. An advisor's feet are held to the fire for not only what he says to you but what he DOESN'T say to you.
To cloud the issue, stockbrokers are now being pressured by their firms to obtain the RIA license but that is so they can sell the packaged product called "managed money."
Here is the kicker (as the pig puckers up): A stockbroker sometimes is dealing with the customer in the role of a stockbroker and other times as an investment advisor. If the broker is recommending his company's latest hot trendy mutual fund (or some other packaged product that he's being pressured to sell) he is NOT acting in a fiduciary capacity, and thus does not have to give you advice that's in your best interest.
Choose an INDEPENDENT registered investment advisor that works ONLY for management fees AND who does NOT accept any other form of compensation - especially "trail fees" from mutual funds, money market funds, and other sources - from any other source.
Just ask the advisor: Do you receive any other form of compensation from any other source other than management fees from your clients? If the answer is "yes" then there is a clear conflict of interest, period.
Some advisors charge quarterly asset-based management fees + they get a cut on trade commissions + they receive trail commission on packaged products like variable annuties, mutual funds, and other products. It's legal AS LONG AS they disclose it to you in writing.
I could go on and on and on...but I won't. I hope this helps.