Selling Away
Chapters in this video
- 0:00 Selling away defined: off the broker-dealer's books
- 1:10 Oral approval trap: why a verbal okay fails
- 2:26 Written pre-approval: the lawful four-step flow
- 3:15 Why selling away is illegal: supervision, SIPC, and fraud
- 4:00 The friend's business, promissory note, and Reg D scenario traps
- 5:44 After-the-fact disclosure never cures the violation
- 6:47 Rapid-fire exam recap
What this video covers
- The precise definition of selling away (private securities transactions): transactions not recorded on the broker-dealer's (BD's) regular books or records
- Why oral approval from a supervisor is never sufficient and is a guaranteed exam trap
- The exact linear flow required for a lawful off-book transaction: written request, written BD approval, recording on BD books, then execution
- Why selling away is prohibited: BD supervisory failure, loss of Securities Investor Protection Corporation (SIPC) coverage, and customer exposure to unregistered or fraudulent securities
- The most common disguised scenarios: friend's private business, promissory notes, and Regulation D (Reg D) private placements done without BD knowledge
- Why informing the BD after execution never cures the violation, even if the security is legitimate and the customer profits
Read the full lesson, free
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