FINRA Rule 3280 Arbitration Attorney

FINRA Rule 3280 “Selling Away”: Private Securities Transactions of an Associated Person

This is also known as the “selling away” rule. According to 3280(b), “Prior to participating in any private securities transaction, an associated person shall provide written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction; provided however that, in the case of a series of related transactions in which no selling compensation has been or will be received, an associated person may provide a single written notice.”

Firms must approve or disapprove this transaction before anything else can happen. If the broker doesn’t abide by this Rule, he’s selling away.

FINRA panels these days appear to consider member firms strictly liable for these infractions. No matter what a firm does to monitor brokers’ activities and head off potential selling away scenarios, the failure to keep it from happening is on the firm.