California Selling Away Attorneys
Selling away occurs when a broker sells securities that are not approved or offered by the firm where the broker is registered. FINRA Rule 3280 prohibits registered representatives from participating in private securities transactions without providing prior written notice to their firm and receiving approval.
This rule exists because unapproved securities are difficult for firms to supervise. Brokers who sell away often steer investors into fraudulent investments, unregistered private placements, and promissory notes that carry undisclosed risk and pay the broker high commissions. Because the firm has no oversight of these transactions, investors lose the protection that supervision is supposed to provide.
Firm Liability for Selling Away
Brokerage firms have an obligation to monitor their brokers for selling away. When a firm fails to detect or prevent a broker’s unauthorized private securities transactions, the firm can be held responsible for the resulting losses in FINRA arbitration. We often pursue selling away claims alongside failure to supervise claims, holding both the broker and the firm accountable.
FAQs
What kinds of investments are typically involved in selling away?
The most common are unregistered private placements, promissory notes, interests in outside businesses, and investments tied to the broker’s personal ventures. These products are not on the firm’s approved list, have not been vetted by the firm’s due diligence process, and often carry far more risk than the investor was told.
What is the difference between selling away and unauthorized trading?
Unauthorized trading involves trades in a client’s account that the client did not approve. Selling away involves the broker selling securities that the broker’s firm did not approve. In unauthorized trading, the issue is the client’s consent. In selling away, the issue is the firm’s oversight. Both are FINRA violations, and both can form the basis of an arbitration claim.
Talk to a California Selling Away Lawyer
If your broker sold you investments that were not approved by their firm, contact Rosenberger + Kawabata. Call (310) 894-6921 or submit an inquiry through our contact form.