A registered representative at a FINRA member broker-dealer serves as a volunteer board member for a local community non-profit organization. Mid-year, the non-profit's executive committee decides to award all board members an annual stipend of $1,500 for their time and services. Under FINRA Rule 3270 regarding Outside Business Activities (OBA), which of the following actions must the representative take before receiving this compensation?
- Provide prior written notification to their employing broker-dealer regarding the compensated outside activity.Answer
- BSubmit a formal written application directly to the SEC and await regulatory authorization before accepting the stipend.
- CDecline the compensation automatically because financial industry rules impose a mandatory 2-year ban on receiving any outside income.
- DObtain verbal approval from MSRB examiners during the next annual compliance inspection.
Answer
The representative must provide prior written notification to their employing broker-dealer before engaging in or receiving compensation for the outside business activity.
Under FINRA Rule 3270, any registered person must provide prior written notice to their member firm before being employed by, or accepting compensation from, any other person or entity as a result of any business activity outside the scope of the relationship with the member firm.
Step-by-Step Solution
Key Concept
Outside Business Activities (OBA) Disclosure Requirements