Selling Away
Chapters in this video
- 0:00 Aaron the Agent and the underwater crypto scenario
- 0:28 What selling away means: off-book securities transactions
- 1:29 After-the-fact disclosure fails the rule
- 2:07 The three-step lawful path for off-book transactions
- 2:32 Why oral approval is worthless
- 2:57 Why regulators prohibit selling away: BD supervision and SIPC
- 3:49 Exam trap: outcome never cures the violation
- 4:35 Common selling-away scenarios and the outside-securities-accounts rule
- 5:05 Rapid-fire exam recap
What this video covers
- The formal definition of selling away and its synonymous term, private securities transaction
- Why written pre-approval from the broker-dealer (BD) must occur before execution, and why oral approval is worthless
- Why informing the BD after the fact does not cure a selling-away violation, even if the security was legitimate
- The investor protections lost in selling-away scenarios, including Securities Investor Protection Corporation (SIPC) insurance coverage and dispute resolution processes
- Why the outcome of the trade (profit, loss, or legitimacy of the security) never cures a selling-away violation
- Common exam scenarios involving private business ventures, unregistered promissory notes, and Regulation D offerings
- How the outside securities accounts rule pairs with selling away: trades booked at another BD still require employer consent and the executing firm's notice
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