New Registration Requirements for Investment Bankers

This is the 25th in a series of brief articles that Moye White is sending to its clients and friends to provide practical insight about the opportunities and challenges presented by today's economy.

Newly adopted NASD Rules now require the registration of investment bankers and their supervisors. NASD Rule 1021(i) applies to all Investment Banking Representatives, defined as those whose activities involve:

  1. advising on or facilitating debt or equity securities offerings through a private placement or a public offering, including but not limited to origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization activities of such offerings, or
  2. advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions, including but not limited to rendering a fairness, solvency or similar opinion.

Registration is not required for investment banking work limited to public (municipal) finance or direct participation programs as defined by NASD Rule 1022(e)(2). Registration as an Investment Banking Representative is also not required for investment banking work limited to private securities offerings pursuant to Section 3(b), 4(2), or 4(6) of the Securities Act of 1933 and the rules and regulations promulgated thereunder, although registration as a Limited Representative –Private Securities Offerings may be necessary.

The Investment Banker provisions are effective November 2, 2009. To qualify as an Investment Banking Representative, an investment banker will need to register on Form U4 and pass the Investment Banking Representative Qualification Examination (Series 79) or obtain a waiver.

The rule adopts a six month transition period beginning November 2, 2009 and ending May 3, 2010. During the transition period, registered representatives who have passed the Series 7 Exam and are currently engaged in investment banking activities may opt in to the Investment Banking Representative registration without taking the Series 79 Exam. Likewise new candidates who pass the Series 7 Exam during the transition period may opt in to Investment Banking Representative registration without also taking the Series 79 Exam. After May 3, 2010, the opt in option will terminate.

Principals supervising Investment Banking Representatives must either pass the Series 79 Exam or opt in during the transition period, and pass the appropriate General Securities Principal exam.

For more information contact: Jackie Benson, David Roos, or Ted White, Chair, Transaction Section at (303) 292-2900.

If you prefer not to receive any unsolicited e-mails regarding Moye White information, please contact us at

Moye White LLP has prepared this bulletin to provide general information; however this bulletin does not provide legal advice and does not create an attorney-client relationship between the reader and Moye White. No legal or business decision should be based solely on the content of this bulletin.

Keep reading

A Yellow Flag for the Red Flags Rule