FINRA Regulatory Element Continuing Education Rule in Effect January 1st, 2023

If you’re a registered rep or a registered principal, this update is for you. A new set of rules that take effect in the new year will impact your registration status.  

Beginning January 1, 2023, all registered representatives will be required to complete their Regulatory Element Continuing Education (CE) requirement on or before December 31, 2023. Individuals will be required to complete this requirement for the registration category in which they are registered. For example, registered representatives must complete a representative-level continuing education course, and registered principals must complete a principal-level continuing education course.

Additionally, on March 15, 2022, an amendment to FINRA Rule 1240 (“Continuing Education”) was adopted, permitting:

1. Persons who terminate from a firm are permitted to maintain their registration status for a period of up to five years before becoming associated with a new firm (known as the Maintaining Qualifications Program or MQP). This change is permitted provided:
   1. The person is not subject to any statutory disqualification or becomes subject to a statutory disqualification following their termination.
   2. The person is not subject to a continuing education (CE) deficiency for the two years prior to termination or becomes subject to a continuing education deficiency following their termination.
   3. The person completes annually, by December 31st of each year, their prescribed regulatory element CE.

Changes to FINRA Rule 1240

Regulatory Element CE (FINRA Rule 1240(a))

The old FINRA Rule 1240(a) required all registered persons within 120 days after their initial two-year registration anniversary to complete a regulatory element continuing education course, specific to their registration status (e.g., representative-level CE for those with a Series 6, 7, 79, etc. registration and principal-level CE for those with a Series 9, 10, 24, etc. registration). 

Failure to comply with the new annual requirement results in the registered person being deemed “CE inactive,” and prohibited from performing any duties and activities which involve a registration, including the solicitation of new business and the receipt of compensation resulting from such transaction (although compensation associated with previously placed business may be received). A registration that remains inactive for two years will be administratively terminated and require the individual to requalify by examination. 

Maintaining Qualifications Program (MQP) (FINRA Rule 1240(c))

FINRA Rule 1240(c) creates an opportunity for registered persons (those holding a representative or principal-level registration) to maintain their registration status after terminating from a firm. If the individual is in good standing (e.g., not subject to a statutory disqualification and is current with their regulatory element CE training at the time of termination), they may be permitted to maintain their registrations for up to five years. 

A person’s participation in the program, at a cost of $100 per year of participation, is contingent upon their continued compliance with their regulatory element CE requirement. This requirement must be met at or within two years of their initial submission of the Form U5, and every year thereafter (up to the total of five years).

Note: The new Regulatory Element CE requirement will be phased in as follows: (1) those holding a registration prior to January 1, 2023, are required to complete the Regulatory Element on or before December 31, 2023, and by December 31 in every subsequent year; (2) those who attain a registration status on or after January 1, 2023, will be required to complete the Regulatory Element on or before December 31, 2024, and by December 31 in every subsequent year.