A registered representative associated with a member broker-dealer is offered a part-time, compensated position as a technical analyst for an independent software firm on weekends. Which of the following compliance steps must the representative complete before accepting the job and receiving compensation?
- Provide prior written notice to the employing member broker-dealer regarding the proposed outside business activity.Answer
- BObtain explicit written approval directly from the Securities and Exchange Commission (SEC) and FINRA.
- CFile a public disclosure notice with the Municipal Securities Rulemaking Board (MSRB) regarding the side employment.
- DObserve a mandatory two-year cooling-off period before receiving any outside compensation from the software firm.
Answer
The registered representative must provide prior written notice to their employing member broker-dealer before engaging in the 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 their member firm unless they have provided prior written notice to the firm.
Step-by-Step Solution
Key Concept
FINRA Rule 3270 - Outside Business Activities (OBA)