SIE - topics not covered in textbook (?)

FINRA FINRA SIE
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Hi!

I am scheduled to take the SIE exam next week and am quite happy with Achievable so far (more feedback after I pass!). In order to prepare for other question styles I have taken practice tests from other online sources and noticed a number of topics that are not covered in the Achievable textbook, unless I missed something (very possible). Such topics include:

-ACAT process when transferring securities from a broker-dealer to another
-deposit requirements when buying municipal bonds on margin (different than for stock)
-mention of SMA (Special Memorandum Account, I presume)
-maximum percentage of directors of an investment company who may be officers, employees, etc. of the company (apparently 49%; in section 7.2, Achivable textbook only specifies that 40% have to be independent)
-Tier 2 Regulation A Offerings (only Reg A covered in Achievable)
-Collateralized Mortgage Obligations
-Role of Registrar (especially contrasted with that of Transfer Agent; term not mentioned in textbook)
-Stabilizing after a new issue
-Follow-on offerings
-Secondary offerings (covered under the term “Secondary Distribution”)

Any thoughts here? I am not too concerned about these particular questions, more about the fact that different sources have different views on what is actually tested in the exam…

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Hi @Kenny_Green - thanks for posting. Short answer - many of the topics you mentioned are not on FINRA’s SIE outline, nor do we receive feedback on these topics being covered from our customers. I can’t speak as to why other vendors are including this information in their SIE materials.

Long answer - I’ll address your questions point by point.

ACAT process when transferring securities from a broker-dealer to another

While FINRA includes this material in their Series 7 outline, it is not mentioned anywhere in the SIE outline. Accordingly, we cover this concept in our Series 7 program, but not on our SIE program.

deposit requirements when buying municipal bonds on margin (different than for stock)

FINRA’s SIE outline only mentions margin a few times, and the test focuses primarily on the basics of margin. Margin requirements for bonds exist, but we have no indication this material is being tested on the SIE.

mention of SMA (Special Memorandum Account, I presume)

Same with the point above. We believe FINRA is only testing margin basics on the SIE, and SMA is an advanced topic. SMA is covered on our Series 7 program, as it is clear FINRA is testing this concept on this exam (not the SIE).

maximum percentage of directors of an investment company who may be officers, employees, etc. of the company (apparently 49%; in section 7.2, Achivable textbook only specifies that 40% have to be independent)

Officers, employees, etc. of the fund company would be considered ‘interested’ or ‘non-independent’ board members. Therefore, the maximum percentage that could serve as board members would be 60%. We cover this material in section 7.3.2.

Tier 2 Regulation A Offerings (only Reg A covered in Achievable)

It’s questionable whether the SIE even covers Regulation A in any form, as it is not mentioned in FINRA’s SIE outline. We believe some questions may mention Regulation A as a wrong answer, but have no indication this concept is being specifically tested on the SIE. Regulation A (including Tier 1 & 2 offerings) is specifically mentioned in FINRA’s Series 7 outline, and is accordingly covered in our Series 7 program.

Collateralized Mortgage Obligations

CMOs are not mentioned in FINRA’s SIE outline, and therefore are not covered in our SIE program. Additionally, we have no indication from test feedback the topic is being covered. However, CMOs are mentioned in FINRA’s Series 7 outline, and accordingly are covered in our Series 7 program.

Role of Registrar (especially contrasted with that of Transfer Agent; term not mentioned in textbook)

Registrars are not mentioned in FINRA’s SIE outline, and therefore are not covered in our SIE program. Additionally, we have no indication from test feedback the topic is being covered.

Stabilizing after a new issue

This is a topic we believe is being tested on the Series 7, not the SIE. Therefore, we cover this topic on our Series 7 program.

Follow-on offerings

These are also known as additional public offerings (APOs), which are covered in this chapter.

Secondary offerings (covered under the term “Secondary Distribution”)

We recently updated this chapter, which covered secondary offerings. You may not have had the opportunity to read the updated material.

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Thanks a lot for the feedback, much appreciated.

From my perspective it is hard to gauge what is in the outline (beyond the title) and what is not - I am relatively new to this and do plan on taking the exam more than once :wink:

For example, the outline calls out “margin requirements” and “FINRA rule 4210”, which lists all requirements in excruciating detail (for long & short positions, for obligations of the US government, etc.). I guess I will trust your experience in the matter and only worry about the basics.

There seems to be a gap between the PDF version (which I received yesterday) and the online material - understandable if you update the latter very often. For example, the PDF bears no mention of follow-on offerings (I know the concept is covered, but the test is also on subtle points of vocabulary).

One more topic that I had not listed, political contributions; per the textbook in section 15.1, the limit is $250 and $0 for non-local campaigns. Apparently FINRA rule 2030 (2030. Engaging in Distribution and Solicitation Activities with Government Entities | FINRA.org) has $350 per election in which the person is entitled to vote and $150 per election in which they are not entitled to vote. Is there a nuance I am not getting? Also, I saw this topic in the FINRA’s own practice exam.

On the governance of investment companies, the Investment Company Act says you’re correct :slight_smile: I will take your word for the rest.

Again, many thanks for the fedeback, and the quality of the Achievable materials.

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For example, the outline calls out “margin requirements” and “FINRA rule 4210”, which lists all requirements in excruciating detail (for long & short positions, for obligations of the US government, etc.). I guess I will trust your experience in the matter and only worry about the basics.

This is one of the biggest challenges I face as a content writer. FINRA lays out an extensive outline and references 100+ rules or regulations. Some rules are simple and basic, while others are long are complex. FINRA rule 4210 is incredibly long and dense; so much so, we could probably write 20 chapters on it. So the question is - what do we cover? You’re right - you’re going to have to trust us on this one. We don’t share too much about our process for determining how “testable” a topic is (it’s our “secret sauce”), but we believe only a small portion of this rule is being tested. Personally, I think memorizing margin requirements for debt securities is a waste of time, as there are so many other (easier) topics that are much more testable.

There seems to be a gap between the PDF version (which I received yesterday) and the online material - understandable if you update the latter very often. For example, the PDF bears no mention of follow-on offerings (I know the concept is covered, but the test is also on subtle points of vocabulary).

I update the material very frequently (sometimes daily), so there’s likely to be some lag between the PDFs we share and the materials on our site. The material you’re referencing was consolidated from other chapters into the Types of offerings chapter just a few days ago. Achievable’s website will always be the most up-to-date, as my updates are instantaneously available upon submission. @Justin handles the PDFs, so maybe he can share his two cents.

One more topic that I had not listed, political contributions; per the textbook in section 15.1, the limit is $250 and $0 for non-local campaigns. Apparently FINRA rule 2030 (2030. Engaging in Distribution and Solicitation Activities with Government Entities | FINRA.org) has $350 per election in which the person is entitled to vote and $150 per election in which they are not entitled to vote. Is there a nuance I am not getting? Also, I saw this topic in the FINRA’s own practice exam.

Interestingly enough, the SIE is a FINRA exam, but they specifically test the MSRB rule regarding political contributions. FINRA’s SIE outline does not mention FINRA rule 2030, but instead lists MSRB rule G-37. This MSRB rule reflects what we have in our material ($250/$0 limit). Additionally, it’s clear this is the rule referenced for the SIE exam, as it only applies to Municipal Finance Professionals (MFPs). FINRA probably doesn’t cover both rules for simplicity. One last thing - the FINRA practice exam references municipal securities and the $250 limit, confirming again which rule is important to know.

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Thanks for the thoughtful and detailed response, @brandonrith.

We’ve designed Achievable as an interactive online course: quizzes after every page, supplementary explainer videos scattered throughout, and personalized feedback based on your progress. We make hundreds of updates to our courses every month, and any “fixed” version of the course materials, like a physical book (which we no longer offer) or the PDF, quickly becomes outdated. The information is still generally accurate, but it won’t include all the improvements we continually make. We offer the PDF as a convenience to people when they aren’t able to study online, but it isn’t meant to be a replacement for the online course.

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Got it! Thanks again for the prompt feedback :slight_smile:

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I took the SIE today, and passed on the first attempt using primarily Achievable materials. Nothing, not even close, to those above mentioned portions of the exam are tested. I will say I encountered only 2 math problems (tender offer & reverse stock split).

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Hi all,

adding a couple of comments here before starting another “passed the SIE” thread :slight_smile:

I took the exam yesterday and passed; there were a handful of surprising questions (likely the 10 experimental ones) but otherwise the Achievable materials seemed very well calibrated for the actual test. Thank you for the patient explanations, and for putting together these materials in the first place!

My guess? Other vendors probably mix questions on the same topic but for different exams (SIE, Series 7, etc.), or difficulty in the “free sample questions” is biased for commercial purposes.

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