Series 6 Ethical and Professional Standards

This chapter is where Series 6 shifts from product knowledge to professional judgment. The exam is not satisfied with knowing what a mutual fund or variable annuity is. It also tests whether you can sell, recommend, communicate, and service those products without crossing ethical, supervisory, or customer-protection lines.

The right way to study this chapter is to think in terms of preventable firm mistakes. Many questions here are really asking which action creates avoidable customer harm, compliance exposure, or disclosure failure. If you approach the chapter with that lens, the rules become more coherent and much easier to remember.

Read this chapter as a conduct filter. If an answer undermines fairness, disclosure, customer fit, or control discipline, it is usually the wrong answer even if it sounds commercially convenient.

In this section

• FINRA Ethics and Conduct Standards
  Core standards of commercial honor and fair dealing under FINRA ethical rules.
  • Standards of Commercial Honor
    The baseline expectation of honest, ethical conduct in the securities industry.
  • Just and Equitable Principles of Trade
    How FINRA applies fair dealing standards to everyday representative conduct.
• Suitability Obligations
  KYC and the major suitability standards that govern Series 6 recommendations.
  • Know Your Customer Rule
    The KYC obligation to gather and update essential customer information before recommendations.
  • Reasonable-Basis Suitability
    The duty to understand a product before recommending it to any customer.
  • Customer-Specific Suitability
    Matching recommendations to the needs, finances, and objectives of a particular customer.
  • Quantitative Suitability
    When trading activity or recommendation frequency becomes unsuitable for a customer.
• Unethical Business Practices
  Misstatements, fraud, and improper communications that violate securities industry rules.
  • Misrepresentations and Omissions
    Why false statements and missing material facts are prohibited in securities dealings.
  • Fraudulent Activities in the Securities Industry
    Common forms of securities fraud and why they trigger civil, regulatory, and criminal consequences.
  • Unapproved Communications
    How unreviewed or improper customer communications create compliance risk.
• Anti-Money Laundering Requirements
  BSA, USA PATRIOT Act, and suspicious-activity obligations relevant to Series 6 representatives.
  • Bank Secrecy Act
    The BSA framework for recordkeeping, monitoring, and AML program controls.
  • USA PATRIOT Act Requirements
    Customer identification, verification, and related AML duties under the USA PATRIOT Act.
  • Suspicious Activity Reports
    When suspicious activity must be escalated, documented, and reported.
• Insider Trading and Confidentiality
  Rules on material nonpublic information, insider trading, and internal information barriers.
  • Insider Trading Provisions
    Why trading on material nonpublic information is prohibited and heavily enforced.
  • Information Barriers
    How firms use information barriers to control conflicts and misuse of nonpublic information.
• Customer Privacy Rules
  Regulation S-P requirements for privacy notices, information sharing, and consumer choices.
  • Privacy Notices under Regulation S-P
    What firms must disclose to customers about privacy practices and information sharing.
  • Opt-Out Provisions
    When consumers can limit information sharing and how firms must communicate that right.
• Professional Conduct and Conflicts of Interest
  Gifts, outside activities, private securities transactions, and disclosure duties that create conflicts.
  • Gifts and Gratuities
    Limits and compliance considerations for gifts, entertainment, and gratuities in the industry.
  • Outside Business Activities
    When outside roles or activities must be disclosed and reviewed for conflicts.
  • Private Securities Transactions
    The rules that govern selling away and related supervisory obligations.
  • Compensation Disclosure
    Why compensation-related conflicts must be understood and properly disclosed.