Selling Away

It is unlawful for broker-dealers and investment advisers to transact in securities that are not approved or offered by the firm where they are registered without written notice. FINRA Rule 3280 prohibits this behavior because unapproved securities are more difficult for brokerage firms to supervise. Unethical broker-dealers and investment advisers can take advantage of lack of oversight to sell investors on fraudulent investments, private placements, and promissory notes that benefit the broker-dealer or investment adviser with high commissions, or that may be completely fraudulent. Brokerage firms have the obligation to prevent such behavior, and if the firm has failed to properly supervise the employee engaged in surreptitious selling away, it can be held responsible for losses incurred.

If your investment adviser engaged in selling away, contact Rosenberger + Kawabata.

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