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A Series 7 license, issued by the Financial Industry Regulatory Authority, is required to trade in most financial securities. The license has three parts: sponsorship by a FINRA member, the licensing exam and passing the background check. While not an absolute bar, a felony conviction can disrupt and delay this procedure.
FINRA's bylaws are explicit. Article III, Section 3 says that anyone with a felony conviction is automatically disqualified from receiving a Series 7 license for 10 years from the date of the conviction. This is a direct reflection and incorporation of the requirements of the Securities Exchange Act of 1934,15 USC 78c(a)(39)(F).
Duty to Disclose
All Series 7 applicants must complete Form U4, the "Uniform Application for Securites Industry Registration or Transfer." Section 14 of the 39-page form requires disclosure of not only criminal convictions, but all criminal charges regardless of resolution. Completion of the U4 also requires submission of fingerprints. Failure to truthfully complete the U4 and disclose all criminal history can be grounds for denying a Series 7 license.
A Series 7 applicant must be working for, and sponsored by, a member of FINRA. However, FINRA members are prohibited from associating with anyone who is subject to statutory disqualification by FINRA. Consequently, a felony conviction will likely bar a prospective applicant from getting sponsorship for 10 years after the conviction date.
Terri Lynn Coop is an attorney by day and a writer by night. She began writing professionally in 2006 and her work has appeared in Dream People, Whispers of Wickedness, Flashshots and "The Flash 40 Anthology." She has a Bachelor of Science in civil engineering from University of the Pacific and a Juris Doctor from the University of Tulsa.