Regulatory Element and Firm Element

The consequence of missing it is specific and severe. A registered person who has not completed the Regulatory Element by the deadline has their registration made inactive and must stop all activity as a registered person, including taking business or being paid for new securities purchases or sales. One narrow payment survives: trail or residual commissions from transactions completed before the inactive status may still be paid, unless the firm has a policy against them. It is not a fine or a note on a file; it stops the person working until the requirement is met. A registration that stays inactive for two consecutive years is administratively terminated by FINRA.

The Firm Element is the firm’s own training. Each member firm must maintain a continuing education program for its registered persons, including those registered permissively. At least once a year the firm evaluates and prioritizes its training needs and writes a training plan that considers its size, structure and scope of business, regulatory developments, and how its people performed in the Regulatory Element. The content is therefore different at every firm, because the analysis behind it is different.

The two are often confused because both are annual and both are called continuing education. Keep them apart by asking who wrote the material. If the content is prescribed for the whole industry and the deadline is a date in the calendar, it is the Regulatory Element. If the content depends on what the firm sells and who it sells to, it is the Firm Element.

Leaving the industry does not have to mean starting again. Under the Maintaining Qualifications Program, a person who ends a registration can keep that qualification for up to five years. They must have held the registration for at least one year just before leaving, must elect the program when the Form U5 is filed or within two years after the registration ends, and must complete the prescribed continuing education by December 31 each year.