Learn the conduct, communications, suitability, compensation, conflicts, account-handling, and associated-person activity rules that dominate Series 26.
The second Series 26 chapter is the main sales-practice function. It tests how the principal supervises recommendations, communications, compensation, outside activities, and associated-person conduct in an investment-company and variable-contracts business. This chapter carries much of the exam’s practical judgment because it forces candidates to connect product-specific supervision with broad FINRA sales-practice rules.
Read this chapter as the front-line supervisory layer. Start with basic supervision and standards of conduct, then move through communications, recommendations and disclosures, compensation restrictions, outside and personal financial activities, and conduct violations or insider-trading controls.
| Section | Focus |
|---|---|
| 2.1 Sales Activity Supervision and Documentation | Standards of commercial honor, prohibited sales activity, conflicts, personal trading, sales patterns, and risk-based review. |
| 2.2 Communications with the Public and Telemarketing | Retail and institutional communications, correspondence, performance, variable-product claims, rankings, analysis tools, telemarketing, and public appearances. |
| 2.3 Supervising Recommendations, Accounts, and Disclosures | KYC, Reg BI, suitability, share classes, breakpoints, switches, deferred variable annuities, variable life, disclosures, and transaction review. |
| 2.4 Cash and Non-Cash Compensation Controls | Gifts, entertainment, cash compensation, non-cash compensation, contests, training meetings, referral payments, networking, and product incentives. |
| 2.5 Outside Activities and Personal Financial Activities | OBAs, private securities transactions, outside accounts, customer borrowing or lending, guarantees, customer funds, and selling-away red flags. |
| 2.6 Conduct Violations and Insider Trading Controls | MNPI, insider trading controls, disciplinary investigations, sanctions, retention of jurisdiction, exemption requests, reporting updates, and remediation. |
| Skill | Exam use |
|---|---|
| Review packaged-product recommendations | Connect costs, breakpoints, surrender charges, riders, objectives, and disclosures to principal review. |
| Supervise communications | Identify misleading mutual fund, variable annuity, variable life, tax, guarantee, and income claims. |
| Control compensation conflicts | Recognize cash, noncash, referral, training-meeting, and networking facts. |
| Escalate associated-person conduct | Apply OBA, PST, borrowing, personal finance, insider-trading, and disciplinary controls. |