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Appeal of Finra Refusal To Waive Series 7 Exam Requirement For Lawyer Dismissed

Michael Stegawski, Exchange Act Rel. 59326, January 30, 2009

Time since appeal – 10 months 17 days
Time since last brief – 5 months 11 days
Pages – 11
Footnotes – 33


Stegawski was a registered rep whose license lapsed. When he associated with a new firm he requested that Finra waive the requirement that he retake the qualifying examination in order to reinstate his Series 7 general securities license. Finra refused and Stegawski filed an appeal. The Commission dismissed the appeal, finding Finra's action appropriate and in compliance with its rules.


Finra rules require that a rep has two years after leaving employment with a member firm to reinstate a Series 7 registration. Thereafter the registration expires and Finra requires that its examination be retaken and passed by the applicant. Stegawski had passed the Series 24 general principal exam, graduated from law school and passed the Florida bar exam after his Series 7 license lapsed. Finra ruled that Stegawski did not qualify under its guidelines for a waiver. Four years previously he had been associated with a member firm as a rep for a few months and had taken the exam at that time.

Exchange Act Section 19(f) requires that the Commission must dismiss an appeal if the Finra action complies with Finra rules and the grounds on which Finra based its action "exist in fact." Finra grants waivers of its examination requirements only under exceptional circumstances. Finra guidelines require that waiver is appropriate only when the degree that the applicant seeks to substitute for the exam is a master's degree that has a heavy emphasis on finance and investments. Neither Stegawski's law degree nor his undergraduate degree in finance meet this requirement. Stegawski also claimed his employment history supported his waiver request. This included a short stint as a rep at another firm, a short externship at the SEC and his current brief employment as a legal assistant at a brokerage firm. This experience does not establish that Stegawski has actual knowledge equivalent to that tested by the Series 7 exam. Nor is the Series 24 exam a substitute for the Series 7.


This was an appeal by a pro se individual who probably spent significantly more time prosecuting his waiver request and the appeal than he would have spent studying for and retaking the Series 7 exam. No difficult factual or legal issues are raised here. Why did the Commission take more than 5 months to rule on this clearly routine matter?