Outside Employment

If a registered representative wants to obtain employment outside of their position with a member firm, the registered representative must first provide written notification to the employing member firm. The member firm may reject or limit the representative’s outside employment. Exceptions to this rule are if the registered representative is a passive investor in a business or if the representative owns rental property. All other outside business activities must be disclosed to the member firm. If the member is a NYSE member, they must provide the representative with prior written approval before the representative engages in any outside activity.

Private Securities Transactions

A registered representative may not engage in any private securities transactions without first obtaining the broker dealer’s prior written approval. The registered representative must provide the employing firm with all documentation regarding the investment and the proposed transaction. An example of a private securities transaction would be if a representative helped a start-up business raise money through a private placement.  If the representative is going to receive compensation, the employing member firm must supervise the transaction as if the firm itself executed the transaction. If a representative sells investment products that the employing member does not conduct business in without the member’s knowledge, then the representative has committed a violation known as selling away. An exception to this is if the representative is helping an immediate family member raise money and the representative receives no compensation for their role in the private transaction. In this case, the notification and permission of the member is not required.

Series 10 Exam Prep Study Guide

GIFT RULE

Related Articles
  1. Financial Advisor

    On The Record: Communications With The Public

    NASD Rule 2211 can make or break your career as a registered principal.
  2. Personal Finance

    Not Every Financial Advisor Gives Impartial Advice

    Some financial advisors provide advice that benefits them rather than you.
  3. Retirement

    Employers: Don't Forget IRS Form 941

    Use Form 941 to report employment taxes on your business.
  4. Investing

    Fatten Up Your Take-Home Pay In 4 Easy Steps

    Many in the financial services industry are underpaid - don't be one of them.
  5. Personal Finance

    What Is the Series 79 Exam?

    If you're getting into investment banking, you'll need to know all about the Series 79 exam.
  6. Financial Advisor

    Should you add a securities license to your qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.
  7. Personal Finance

    How to Avoid Family Financial Sabotage

    Here are a few tips to keep in mind when a family member asks for financial assistance.
  8. Personal Finance

    Career Benefits From The CFA Institute

    The CFA Institute provides members with a variety of ongoing career and networking benefits.
  9. Financial Advisor

    Series 63, Series 65 Or Series 66?

    When joining the world of investment professionals, you must take the right exams.
  10. Financial Advisor

    Introduction to the Series 65 exam

    The Series 65 is required in many states in order to be a fee-based advisor. Find out what it is and whether you need it.
Trading Center