What is the difference between OBA and Selling Away on the Series 7?

Outside Business Activity (OBA, FINRA 3270) is non-securities work outside the firm (e.g., bartending, real estate). It requires prior written notice to the firm. Private Securities Transactions ('Selling Away,' FINRA 3280) involves securities transactions not on the firm's books. If compensation is received, written permission is required. If no compensation, written notice is required. The exam tests the notice vs. permission distinction heavily.

What are the Rule 144 requirements for restricted and control stock?

SEC Rule 144 governs resale of restricted and control securities. Restricted stock requires a 6-month holding period for reporting companies. Control stock (held by affiliates/insiders) is subject to volume limits: the greater of 1% of outstanding shares or the 4-week average trading volume. A Form 144 filing is required when selling more than 5,000 shares or $50,000 in a 3-month period.

What is Reg D and how do accredited vs non-accredited investors differ?

Regulation D provides exemptions from SEC registration for private placements. There is no limit on accredited investors (net worth over $1 million excluding primary residence, or income over $200,000 individual / $300,000 joint). Non-accredited investors are limited to a maximum of 35. General solicitation is generally prohibited unless all investors are accredited (Rule 506(c)).

What is the MSRB Rule G-37 political contribution limit?

Under MSRB Rule G-37, Municipal Finance Professionals (MFPs) may contribute up to $250 per election to a candidate they are eligible to vote for. Contributions exceeding this amount, or contributions to candidates the MFP cannot vote for, trigger a 2-year ban on negotiated municipal securities business with that issuer. This is known as the pay-to-play rule.

What is the annual gift limit for registered representatives?

FINRA rules limit gifts to $300 per person, per year from registered representatives (effective March 30, 2026, increased from $100). Exceptions include: personal gifts unrelated to business (weddings, births), business entertainment where the rep is present (meals, sporting events — no dollar cap), and de minimis promotional items (pens, logo items). Tickets to events where the rep does NOT attend count as gifts toward the $300 limit.

What are the insider trading penalties on the Series 7?

Under the Insider Trading and Securities Fraud Enforcement Act of 1988: Civil penalty is treble damages (3 times the profit gained or loss avoided). Criminal penalty is up to $5 million fine and up to 20 years imprisonment. These penalties apply to anyone who trades on or tips material nonpublic information (MNPI).

What is the traffic light system for Series 7 rep conduct?

The traffic light framework categorizes rep conduct into three levels: Green (Allowed with Notice) includes business entertainment if the rep attends, OBA with prior written notice, and opening outside accounts with written notice to both firms. Yellow (Permission Required) includes selling away with compensation (requires written permission) and MSRB contributions under $250 to candidates the MFP can vote for. Red (Prohibited) includes gifts over $300 per person per year (effective March 30, 2026), pay-to-play violations triggering a 2-year ban, and insider trading.

What is the difference between written notice and written permission for Series 7?

Written notice means informing the firm in writing — the firm acknowledges but doesn't need to approve. This applies to OBA (FINRA 3270) and selling away without compensation. Written permission means the firm must explicitly approve in writing before the activity occurs. This applies to selling away with compensation (FINRA 3280). The distinction between notice and permission is one of the most tested concepts on the Series 7.

What does business entertainment vs gifts mean for the Series 7?

Business entertainment (meals, sporting events, concerts) has no dollar limit as long as the registered representative is present. Gifts have a strict $300 per person per year limit (effective March 30, 2026, increased from $100). The key distinction: if you give a client tickets but do NOT attend the event yourself, it counts as a gift toward the $300 limit. If you attend with the client, it is entertainment with no cap.

What are the requirements for opening accounts at other broker-dealers?

A registered representative who opens a brokerage account at another FINRA member firm must provide written notice to both their employer (the employing firm) and the executing firm (where the account is being opened). Both firms must be informed of the rep's association with the other firm. This allows proper supervision of the rep's trading activity.

What is the Rule 506(c) exception for general solicitation in Reg D?

Rule 506(c) under Reg D permits general solicitation and advertising for private placements, but only if all purchasers are accredited investors and the issuer takes reasonable steps to verify their accredited status. Under Rule 506(b), general solicitation is prohibited, but up to 35 non-accredited investors may participate.

Series 7 · Updated 2026

Roles, Rules & Regulations

OBA, Selling Away, Rule 144, Reg D & Pay-to-Play

From "Selling Away" to "Pay-to-Play," these are the conduct rules every Registered Rep must know. The exam loves mixing them up.

📜 Rule 144 & Reg D 🚦 Conduct ⚖️ OBA vs Selling Away 🎁 Gifts & G-37 🚨 Insider Trading

About this guide: Covers every conduct rule and regulation tested on the FINRA Series 7 exam, updated for 2026. Includes Rule 144, Reg D, OBA, selling away, gift limits, MSRB G-37 pay-to-play, and insider trading penalties. Published by 2DollarTests.

📜

Series 7: Rule 144 & Reg D — Securities Exemptions

2 rules · The "Big 2" exemptions they always test

Rule 144 (Restricted & Control Stock)

SEC Rule 144

Restricted Stock:

6-month holding period (reporting companies).

Control Stock:

Volume limit = greater of 1% outstanding or 4-week avg. volume.

Filing Trigger:

Form 144 required if > 5,000 shares or $50,000 in a 3-month period.

Reg D (Private Placements)

Reg D / 506(b) / 506(c)

Accredited:

Unlimited number. ($1M net worth excl. primary residence, or $200k/$300k income.)

Non-Accredited:

Maximum 35 investors.

Solicitation:

Generally prohibited — unless all investors are accredited (Rule 506(c)).

⚠️

Common Exam Trap

Rule 144 restricted stock has a holding period. Rule 144 control stock has volume limits but no holding period (affiliates acquired shares normally). The exam tests which restriction applies to which type.

🚦

Series 7: Rep Conduct — The "Traffic Light" Protocol

3 tiers · What's allowed, what needs permission, what's banned

✅

Allowed / Notice

Business Entertainment

Dinners/tickets — no $ limit if the rep attends.

OBA (Outside Business)

Non-securities work (e.g., bartending). Prior written notice to firm.

Outside Accounts

Accounts at other firms. Notify both firms in writing.

⚠️

Exceptions Only

Selling Away

Private securities transactions:
Paid → written permission.
Unpaid → written notice.

MSRB Contributions

Allowed only if: ≤ $250 per election AND entitled to vote for that candidate.

🚫

Strictly Prohibited

Gifts > $300

$300/person/year max (eff. March 2026). Tickets without you attending = gift!

Pay-to-Play Violation

Contributing to a candidate you cannot vote for → 2-year ban.

Insider Trading

Civil: 3× profit. Criminal: $5M / 20 yrs.

⚖️

Series 7: OBA vs. Selling Away vs. Outside Accounts

3 activities · The #1 most-confused topic on the exam

OBA (Outside Business Activity)

Any employment or compensation outside the firm not involving securities (e.g., bartending, real estate).

Prior Written Notice
Permission not strictly required by FINRA, but firms may deny.

FINRA 3270

Selling Away (Private Securities)

Executing securities transactions not recorded on the firm's books.

With compensation: Written Permission Required.
No compensation: Written Notice Required.

FINRA 3280

Opening Outside Accounts

Opening a brokerage account at another FINRA member firm.

Written Notice to Both Firms
1. Notify employer. 2. Notify executing firm.

💡 The key distinction: OBA = notice only (non-securities work). Selling Away = notice OR permission depending on compensation (securities work off-books). The exam tests whether the activity involves securities and whether money changed hands.

🎁

Series 7: Gifts, Gratuities & MSRB G-37 Pay-to-Play

2 rules · Dollar limits that trigger violations

Gifts & Gratuities

FINRA Rules

Annual Limit

$300

Per person, per year

Entertainment

No Cap

If rep attends

Exceptions to $300 limit (effective March 30, 2026, increased from $100): personal gifts unrelated to business (weddings, births), business entertainment if rep attends (meals, sports), de minimis items (pens, logo items).

MSRB G-37 (Pay-to-Play)

MSRB Rule G-37

MFP Limit

$250

Per election, if can vote

Violation Ban

2 Yrs

No negotiated muni biz

The Rule: If a firm/MFP contributes to an official, they are banned from negotiated underwriting with that issuer for 2 years. Exception: MFPs may give ≤ $250/election to candidates they can vote for.

⚠️

Common Exam Trap

Tickets to a sporting event where the rep does NOT attend = a gift (counts toward $300 limit). Tickets where the rep does attend = entertainment (no limit). The exam loves this distinction.

🚨

Series 7: Insider Trading Penalties — The Act of 1988

2 penalty tiers · Civil + criminal

Civil Penalty

Treble Damages

3× profit made or loss avoided

Criminal Penalty

$5 Million / 20 Yrs

Maximum fine and imprisonment

💡 Both the tipper and the tippee face penalties. The person who received the tip and traded on it is just as liable as the person who leaked the material nonpublic information (MNPI).

Don't Get Tricked.

The exam loves to mix up Rule 144, OBA, and Selling Away. Practice differentiating them until you can't miss.

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