What is the Series 82 License and Exam?

The Series 82 gives its holder the authority to conduct private securities transactions, among other activities. This exam is also known as the Private Securities Offerings Representative Exam. Private securities are investments only available for a select group of investors. Here’s how it all works.

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Series 82 License and Changes

The Gramm-Leach-Bliley Act of 1999 created the Series 82 license. This act repealed or revised much of the Glass-Steagall Act, a 1933 law that separated investment banking from commercial banking. Because of the separation imposed by the law, commercial banks could not use depositors’ funds for risky investments, and only 10% of their income could come from selling securities. The Gramm-Leach-Bliley Act changed that.

After the repeal of Glass-Steagall, the Securities and Exchange Commission (SEC) removed Series 82 transactional abilities from the Series 62 and Series 7 licenses. The Financial Industry Regulatory Authority (FINRA) established the Series 82 as an individual license focused on private securities transactions by registered representatives.

The Series 82 exam and all other FINRA representative level exams are comprised of two exams: the Security Industry Essentials (SIE) exam and the Series 82 exam. Rather than taking a two-and-a-half-hour, 100-question exam, candidates first take the 75-question SIE exam and then a 50-question Series 82 exam.

Series 82 Exam

The Series 82 exam is sponsored by FINRA and administered at Prometrix test centers around the United States. To take the test, you must be sponsored by an SEC-registered organization. Aside from that, there are no other prerequisites. The exam lasts one and a half hours and has 50 multiple choice questions. There are also five additional unscored questions randomly scattered throughout the test.

To pass the test, you must get a score of 70% or higher. It costs $100 to take the test, and the recommended study time is 60 to 80 hours. You may use FINRA’s content outline to help you study.

In order to obtain the Private Securities Offerings registration, candidates must also pass the Security Industry Essentials (SIE) exam. If you passed certain other licensing exams (for example, the Series 7 or 79) before Oct. 1, 2018, you may be able to waive the requirement to take the SIE exam.

The Series 82 Exam has four sections:

Section One: Characteristics of Corporate Securities

This covers all types of securities in the market. Specifically, this section tests candidates on equities, debt, asset-backed securities, real estate investment trusts, common stock, preferred stock and rights and warrants. It also covers investment companies and their structures, as well as different fund variations.

Section Two: Regulation of the Market for Registered and Unregistered Securities

The second section tests candidates’ knowledge of the private placement mechanisms involved with securities. It also covers underwriting commitments, financing proposals, distribution and pricing. Other topics in this section include trading and transactions, the marketing and advertising of private placements and regulations under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Section Three: Analyzing Corporate Securities and Investment Planning

This section tests candidates’ analysis of corporate securities, such as cash flow statements for equity securities and balance sheet income statements. It also covers debt analysis, including bond ratings, call provisions, interest rate risk and yield curves. Additionally, the section touches on comprehensive market topics, such as fiscal policy, the Federal Reserve Board and the economy. Investment planning features like suitability, investment objectives, risk, portfolio construction, constraints and tax treatment are also discussed.

Section Four: Handling Customer Accounts and Industry Regulations

Section Four covers account documentation and regulatory expectation. It also discusses FINRA rules, client account forms, documentation, investment disclosures and regulatory filings with the SEC.

What the Series 82 Means for Financial Professionals

The Series 82 opens a specific door that other licenses do not. It authorizes the holder to sell private securities offerings, a category of transactions that was carved out from the Series 7 and Series 62 after the Gramm-Leach-Bliley Act. Without this license, a registered representative cannot legally facilitate private placement transactions.

For advisors working at firms that deal in private placements, the Series 82 is a baseline requirement. It is not optional or supplementary. If the firm structures or distributes Regulation D offerings, the representatives handling those transactions need this license to stay compliant with FINRA rules.

The license can also expand a professional’s earning potential. Private placement commissions tend to be higher than those on publicly traded securities. This is because the transactions are more complex, involve longer sales cycles and serve a narrower pool of qualified buyers.

Professionals who hold the Series 82 alongside other licenses, like the Series 7 or Series 79, can operate across both public and private markets. This combination gives them flexibility to serve clients whose investment interests span listed securities, private equity, private debt and other alternative offerings.

The license does not qualify a professional to provide financial planning, manage discretionary accounts or give tax advice. It is a transactional authorization. Professionals who want to offer broader advisory services will need additional licenses or registrations to do so.

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What the Series 82 Means for Investors

If you are participating in a private placement, the person presenting the deal and handling your subscription paperwork should hold a Series 82 license. This tells you they have passed an exam covering securities analysis, private placement regulations, underwriting mechanics and investor suitability requirements.

Private placements are not traded on public exchanges, which means they carry less liquidity, less transparency and higher risk than publicly listed investments. Working with a licensed Series 82 representative does not eliminate those risks. However, it does mean that the person facilitating the transaction has been tested on the rules designed to protect investors in this space.

Investors should understand that a Series 82 holder’s role is transactional. They are there to present the offering, explain the terms and execute the paperwork. They are not typically providing ongoing portfolio management, retirement planning or comprehensive financial advice. The relationship is tied to the deal.

Before committing capital, investors should ask what commission the representative earns on the transaction, read the private placement memorandum carefully and verify the representative’s background through FINRA’s BrokerCheck tool at brokercheck.finra.org. These steps take just minutes and can surface important information about the representative’s track record.

Investors who are being approached about private placements for the first time should also confirm that they meet the accredited investor requirements and that the offering is properly registered or exempt from registration. A licensed Series 82 representative should be able to answer both questions clearly. If they cannot or will not, that is a reason to pause before investing.

Benefits of the Series 82 License

The Series 82 license is broad in scope. It requires licensees to fully understand how all types of debt, equity and other securities are analyzed, underwritten and offered to investors. Consequently, the Series 82 license comes in handy if you sell private securities for a commission.

The license also lets you structure and sell primary offerings of private placements. As a result, clients will have the security of knowing that their private securities offerings representative knows all of the major job functions of their position.

Series 82 Exam vs. SIE Exam

To earn the Series 82 license, candidates must pass not only the Series 82 exam but also the SIE exam. Both exams are FINRA tests.

The introductory-level SIE exam targets prospective securities industry professionals. It assesses candidates’ knowledge of basic securities industry information and concepts fundamental to working in the industry. The test covers many topics, including the structure of the securities industry markets, regulatory agencies and their functions, different types of products and their associated risks and prohibited practices.

Anyone over the age of 18 can take the SIE exam, and you can take the exam without joining a FINRA member firm. Passing the SIE exam alone does not qualify individuals to register with a FINRA member firm or to engage in securities business. To register for and engage in securities business, individuals must pass the SIE exam as well as a qualification exam covering specific securities.

You can then use the SIE to show prospective employers that you have basic industry industry knowledge, and all you have left to do is take the shorter qualification exam, such as the Series 82, in order to get your license. SIE results are valid for four years.

Essentially, the SIE exam covers general knowledge topics that the Series 82 and all other FINRA qualification exams once covered. But now, the qualification exams are shorter.

Bottom Line

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The Series 82 is necessary to obtain in order legally facilitate private placement transactions. Earning it requires passing the four-section, 50-question Series 82 exam, as well as the SIE exam. If you’re seeking a Private Securities Offerings registration but also looking for work or have yet to join a FINRA member firm, consider taking SIE exam first. The Series 82 requires joining a FINRA member firm before you take the exam.

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