A registered representative at a FINRA member broker-dealer is offered a compensated weekend position as a financial consultant for a local commercial real estate company. The consulting work is entirely outside the scope of her employment with the broker-dealer and does not involve selling securities or soliciting clients. Which of the following actions must the representative take prior to engaging in this activity?
- Provide prior written notice to her employing member firm in the form specified by the firm.Answer
- BObtain prior written approval directly from FINRA and the SEC before receiving any outside compensation.
- CNo notification or firm permission is necessary because the position does not involve investment banking or securities transactions.
- DRefrain from taking the position because accepting any compensated outside employment triggers an automatic two-year statutory disqualification under MSRB rules.
Answer
The registered representative must provide prior written notice to her employing member firm before engaging in the compensated outside business activity.
Under FINRA Rule 3270, no registered person may be employed by, or accept compensation from, any other person as a result of any business activity outside the scope of the relationship with the member firm unless prior written notice has been provided to the member firm in the form specified by the firm.
Step-by-Step Solution
Key Concept
FINRA Rule 3270 Prior Written Notice Requirement for Outside Business Activities (OBA)