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Selling Away – FINRA Rule 3040 Selling away is when a securities broker buys, sells, or solicits securities that are not approved by the broker’s firm. This is against the rules set by FINRA (Financial Industry Regulatory Authority), particularly FINRA Rule 3040, and other securities laws. Selling away often involves fraudulent investments, private placements, and promissory notes. For broker-dealers, selling…

FINRA Arbitration Process Arbitration is a method of resolving disputes that serves as an alternative to the standard court process. Instead of having a judge and jury make a decision, parties involved in an arbitration agree to have their dispute settled by an impartial panel of one or three arbitrators. Nearly all disputes between investors, brokers, and brokerage firms are…

What is Failure to Supervise? The duty to properly monitor and supervise employees is a responsibility that any brokerage firm must assume. The North American Financial Regulatory Association (FINRA) Rule 3010 requires brokers, dealers, and other intermediaries such as investment counselors or money managers to have an obligation toward all customers they serve—that means investors placing funds in their trust…

The Financial Industry Regulatory Authority (FINRA) has established rules and regulations regarding the sale of securities. All sales recommendations must meet the ethical standards of the industry as set forth by FINRA. Brokerage firms are required to supervise the suitability of their broker’s investment recommendations. The Suitability Rule requires brokers to make recommendations that are suitable for their clients, based…