What Happens When a Brokers License Is Suspended?

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A stockbroker can work in a retail office, an institutional office, as an independent contractor or she can trade on one of the major stock exchanges. Most stockbrokers have a college degree, and all are required to have an active license.

Significance

A stockbroker must take and pass the General Securities Registered Representative Examination. This is called the Series 7 Exam. Many states also require the Uniform Securities Agents State Law Examination.

Considerations

If a stockbroker does not work as a stockbroker during a two-year time period, the license becomes inactive and the broker must retake the Series 7 exam and other exams. A stockbroker cannot conduct business with an expired license.

Continuing Education

Every three years, Series 7 representatives (stockbrokers) must take and complete a continuing education course at a testing center. Failure to do so can result in a license suspension until the broker completes the course.

Effects

If a stockbroker's license is suspended, it has a dramatic impact on his business, clients and paycheck. He cannot legally service clients, offer advice, enter trades and/or maintain customer accounts.

Warning

Some firms may permanently dismiss or temporarily suspend an employee (stockbroker) with a suspended license. A license can also be suspended due to pending customer complaints, improper practices, investigations or or other legal matters.

Expert Insight

FINRA, the Financial Industry Regulatory Authority, oversees close to 4,750 brokerage firms. Its website allows individuals to find a broker by name; verify if a broker is licensed and current; and review any complaints.

References

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