You Might Think Twice About Using A Broker Who Failed The Exam To Get His License

April 17, 2014 by Thomas F. Burke, P.C.

The Wall Street Journal reported that there are more than 51,500 stockbrokers that have failed, at least once, an exam to obtain a license to sell securities. Additionally, those brokers that failed the exam have worse disciplinary records than other brokers. This information is not disclosed on the Financial Industry Regulatory Authority ("FINRA") BrokerCheck website that is accessible to the public.

Each broker must pass a Series 7 exam given by FINRA and a Series 63 state broker examination. In analyzing the results from the state test, the Wall Street Journal found that, on average, the more times a broker failed a test correlated to the higher the number of problems associated with that broker, including criminal charges and firing. Those who failed the test more than twice were 77% more likely to report a felony or financial related misdemeanor and 55% more likely to be fired than brokers that passed the tests on their first try. About 14% of brokers failed the test at least once. A broker that failed the test at least three times was about two-thirds more likely to have three or more red flags on their record.

In 2012, FINRA sought public comment on disclosing brokers test scores. Industry organizations strongly objected and FINRA declined to provide them to the public.

A broker trainee can take the Series 7 and the Series 63 exam an unlimited number of times, although an applicant must wait six months after failing the test to retake it. Both exams are multiple choice with a passing grade of 72%. Some firms limit the number of times a trainee can take the test.

Thomas F. Burke and Terrance Buehler collectively have more than sixty years of experience helping investors who have suffered losses as a result of misconduct by securities issuers and securities brokers. . If you feel that you have received unsuitable trade recommendations, please contact Mr. Burke at 312/362-1300 or by email at tburke104@att.net.