The Series 82 (formally, the Limited Representative - Private Securities Offerings Qualification Examination) is a professional license that allows a financial professional to sell private placement securities. Administered by the FINRA (Financial Industry Regulatory Authority), this exam is designed for individuals, such as investment bankers or merger and acquisition advisors, whose work is confined to dealing in these non-public investments. Unlike broader licenses that cover publicly traded stocks and bonds, the Series 82 is highly specialized. For the average investor, you won't be taking this exam, but you might encounter a professional who holds it, especially if you qualify as an accredited investor and are offered a stake in a private company. Understanding what this license covers helps you grasp the professional's specific area of expertise and, more importantly, the unique nature of the investments they handle.
A private placement is the sale of securities to a limited number of chosen investors. These are not the shares you buy on the New York Stock Exchange or NASDAQ. Instead, they are direct offerings from a company, often a startup or a business looking to raise capital without the cost and regulatory burden of a public offering. These transactions are typically governed by rules set forth by the U.S. Securities and Exchange Commission (SEC), such as Regulation D. Because these securities are not registered with the SEC in the same way public stocks are, they are generally riskier and less liquid. There is no public market to easily sell your shares, and the company is not required to provide the same level of transparent financial reporting. The Series 82 exam ensures that the professionals facilitating these deals understand the complex structure, valuation, and regulatory rules surrounding them.
While the Series 82 is a professional exam, its existence offers a crucial lesson for value investors about the investing landscape. It highlights the stark difference between public and private markets.
Value investing, as championed by figures like Benjamin Graham and Warren Buffett, thrives on information and analysis. In the public markets, companies are legally required to disclose a wealth of financial data, allowing investors to calculate a company's intrinsic value and search for a margin of safety. This is the world most of us operate in. The private markets, where Series 82 professionals operate, are a different beast. Information is scarce, confidential, and not standardized. This makes due diligence incredibly difficult and requires a specialized skill set. It underscores a fundamental value investing principle: only invest within your circle of competence. For the vast majority of investors, the opaque and illiquid nature of private placements puts them firmly outside that circle.
If you are ever presented with a private investment opportunity, remember that you are playing in the professionals' sandbox. The person selling you the investment may be a Series 82 holder—a specialist in these deals. Ask yourself:
For most, the answer reinforces the wisdom of sticking to the transparent and liquid public markets.
To put the Series 82 in context, here’s how it compares to other common FINRA licenses you might hear about: