The Series 22 exam also called the Direct Participation Programs Limited Representative Exam (DR) — tests the competency of an entry-level registered representative to perform their job as a direct participation programs representative.

What are direct participation (DPP)  programs?

Direct participation program is a financial security that allows investors to participate in a business venture’s cash flow and taxation benefits. The term originates from the Securities Act of 1933 and NASD Rule 2810, which addresses the regulation of compensation, fees and expenses in public offerings of DPPs.

The most common Direct participation programs invest in real estate, energy, futures & options, and equipment leasing projects. A DPP’s are typically organized as a limited partnerships or limited liability companies, structures that allow the income and losses of the entity to flow-through to the underlying taxpayer on a pre-tax basis. As a result, the DPP pays no tax at the corporate level. An investor’s stake in the DPP is quantified in units and may be referred to as their interest. A non-listed real estate properly organized eliminates double taxation which is the plague of regular c corporations.

The Series 22 exam measures the degree to which each candidate possesses the knowledge needed to perform the critical functions of a direct participation programs representative, including the solicitation, purchase and sale of limited partnerships, among other products.

Candidates must pass both the Securities Industry Essentials (SIE) exam and the Series 22 exam to obtain the Direct Participation Programs Representative registration.

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