Why Employers Hate Outside Business Activities and Private Securities Transactions
[I]t's an old story: registered representatives want to engage in outside business activities. Why? Sometimes a lucrative outside business opportunity comes your way and, to be blunt, times are tough. Lately, you can't make ends meet doing the 9-to-5 at your FINRA member firm. Plus, your employer arbitrarily cut payouts and raised the qualifying levels on the grid. You have to do that much more business just to get back to even.
All of which convinces you to pitch some outside deal to your firm's clients or potential clients. You know the folks behind the deal — or at least you think you do — and you've looked over the terms of the proposition — well, okay, you're not a lawyer or CPA, but you sort of skimmed the numbers. What you do know is that you're being offered a chunk of change to find investors. The way you see it, no harm, no foul.
If only it were that easy. Problem one is NASD Conduct Rule 3030: Outside Business Activities of An Associated Person. It restricts your ability to accept employment/compensation away from your FINRA firm, unless you provide prompt written notice to your employer. Okay, so you'll send the damn notice and nicely ask your firm's permission. Of course, some genius suggested to you that you should just keep your mouth shut and go ahead and sell the deal off the books. Like who's gonna know?
TO READ THE FULL ARTICLE, VISIT:
#0066cc ; font-size: medium;"> http://registeredrep.com/securities_law/finance_outside_business_why/index.html
Learn About #800080 ;">Current Outside Business Activities Regulatory cases:
#800080 ;"> http://www.rrbdlaw.com/enforcement-actions/index.php?cid=4
Learn About #800080 ;">Current Private Securities Transactions cases:
#800080 ;"> http://www.rrbdlaw.com/enforcement-actions/index.php?cid=5
Why didn't HTK bring Williams in as a 3rd party respondant ? And can they (HTK) go after the rep for idemnification?
Very interesting...unfortunatlely private deals are becoming more and more common.
Thanks for posting Bill!