Selling Away -
this involves soliciting securities transactions and other financial products or services that are not offered or sponsored by the member firm.

Giving or Receiving Gifts Beyond the Allowable Amount - Gifts of more than $100 given to any member, associated person or employee of a member or associated person in relation to the business of the employer is prohibited.

Manipulative and Deceptive Devices
The following are prohibited sales practices that are considered manipulative and deceptive:

Forgery - A member may not falsely alter any written statement, including but not limited to signing a customer's name to any document or application.

Switching - A member may not move a customer's funds from one mutual fund family to another in order to generate additional commissions.

Borrowing From or Lending to Customers - The general rule is that borrowing between the registered representative and the customer is strictly forbidden. The only exception is a two-part one. First, the broker-dealer must have a written policy that permits such borrowing under specified conditions. Second, one of the following conditions must be met:

  • The customer must be a member of the representative's immediate family This is defined as: parents, grandparents, mothers-in-law or fathers-in-law, husbands or wives, brothers or sisters, brothers-in-law or sisters-in-law, sons-in law or daughters-in-law, children, grandchildren, cousins, aunts or uncles, or nieces or nephews, and also includes any other person whom the registered person supports, directly or indirectly, to a material extent.

  • The loan has been made on commercial terms that the customer generally makes available to members of the general public similarly situated as to need, purpose and creditworthiness

Commingling of Funds - A member may not combine a customer's funds or securities with their own. Also, they may not pledge a customer's funds or securities as joint collateral for a bank loan unless authorized in writing by the customer.

Insider Information - A member may not trade securities or make recommendations to trade based on material nonpublic information. Such insider information is discussed in more detail in the Communications With Prospective Customers section.

Selling Dividends - A member may not induce the sale of mutual funds by implying that a purchase just before a dividend or capital gain distribution is advantageous.

Guarantee Against Loss - A member may not state, imply, infer or guarantee that an investment account is guaranteed against loss. In fact, customers must be told that their investment funds are not insured, not guaranteed and may lose value.



Introduction

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