What constitutes an outside business activity in FINRA?
FINRA Rule 3270 defines outside business activities very broadly. Receiving compensation, in any form, for business conduct; or. Having the reasonable expectation of receiving compensation for their role at some point in the future.
What is not considered to be an outside business activity engaged in by an associated person quizlet?
A passive investment, such as the purchase of a limited partnership unit, is not considered an outside business activity. An associated person may make a passive investment for his own account without providing written notice to the employing broker-dealer.
What are outside securities?
Outside Securities means any book-entry securities other than Japanese Securities including book entry Foreign Government Securities.
What is selling away in FINRA?
Selling away occurs when a broker inappropriately sells securities that are not offered or overseen by their member brokerage firm. To avoid scrutiny from their brokerage firm’s compliance department; To chase high commissions associated with extremely risky investments.
Which of the following would be an associated person?
A sole proprietor, partner, officer, director, branch manager of the member firm, or any person occupying a similar status of performing a similar function. Any company, government or political subdivision or agency or instrumentality of a government controlled by or controlling the member firm.
In which of the following circumstances would a firm be denied FINRA membership?
In which of the following circumstances would a firm be denied FINRA membership? The firm has been expelled or suspended by the foreign equivalent of an SRO. When an employee is either terminated from, or willfully leaves, a member firm, Form U-5 must be filed.
What are outside business activities?
An outside business activity can be any activity taking place outside the member firm whereas a private security transaction, also referred to as “selling away,” is more specifically an outside activity where an associated person has involvement in a securities transaction taking place outside the normal course of …
Definition of Outside Business Activities Outside Business Activities means any activities that a Supervised Person may be engaged in outside of their employment with the Firm, including, but not limited to, service as an officer, director, partner, employee, consultant or independent contractor with any for profit or non-profit organization.
Is outside employment permitted by FINRA?
In order to take outside employment, representatives are required by FINRA to give written notice to their firm, and they must follow any instructions of the firm. A registered representative wishes to sell a customer a limited partnership unit that is offered through his friend – the general partner in the venture.
What are “selling away” FINRA rules?
Generally, selling away is a violation of securities regulations and the firm’s compliance procedures by which its brokers must abide. Further, such “outside” investments may be in themselves fraudulent. The regulatory basis for selling away cases is found in NASD rule 3040 and FINRA rule 3270 (formerly NASD rule 3030).
What are private securities transaction?
A private securities transaction occurs when a licensed investment representative presents or sells a security or other type of investment that is not officially offered by the investment firm that employs him.