Selling Away: When Your Financial Advisor Breaks the Rules
Everyone wants to invest in the next hot new startup. But when your financial advisor pitches an “exclusive” investment opportunity outside their firm’s approved products, you could be the victim of “selling away” – a practice that’s strictly prohibited by FINRA.
What Is Selling Away?
Selling away occurs when financial advisors recommend investments that haven’t been vetted or approved by their brokerage firm. FINRA Rules 3270 and 3280 require advisors to get written approval from their firms before participating in any outside business or private securities transactions.
The rules exist for good reason: approved investments undergo rigorous due diligence, while unapproved securities lack oversight and proper disclosure.
Why Do Advisors Risk Their Careers?
Unscrupulous advisors engage in selling away because it offers several advantages:
- Higher commissions without firm oversight
- Hidden partnerships with investment sponsors
- Reduced transparency about fees and conflicts
- Less regulatory scrutiny of their activities
Red Flags to Watch For
The clearest warning sign is missing documentation. If you don’t receive official trade confirmations or statements showing your investment, it’s likely unregistered. Legitimate investments always appear on your brokerage statements with proper documentation.
Protecting Your Investments
If you suspect selling away violations, review your statements and confirmations immediately. Missing documentation or investments that don’t appear on official statements are major red flags requiring immediate legal attention.
Contact us for a free consultation.
We’ll evaluate your case and explain your options for recovery.