A registered representative at a FINRA member firm accepts a paid position as an adjunct instructor teaching a weekly evening finance course at a local university. Separately, the representative purchases shares in a privately held technology startup as a purely passive investment, taking no active role in the company's management or operations. Under FINRA Rule 3270, which of the following requirements applies to the representative's activities?
- The representative must provide prior written notice to the member firm for the teaching position, but no notice is required under FINRA rules for the passive investment.Cevap
- BThe representative must obtain written permission directly from FINRA before accepting compensation for the teaching position.
- CThe representative must provide prior written notice to the member firm for both the teaching position and the passive startup investment.
- DThe representative is strictly prohibited from receiving outside compensation while registered with a member firm under federal pay-to-play rules.
Cevap
The representative must provide prior written notice to the member firm for the teaching position, but no notice is required under FINRA rules for the passive investment.
Under FINRA Rule 3270, an associated person cannot engage in any compensated business activity outside the scope of their firm employment without providing prior written notice to the member firm. Teaching for a stipend is a compensated activity requiring prior written notification. Conversely, purely passive personal investments (such as purchasing stock in a company without taking an active operational role) are explicitly exempt from the OBA notification requirement.
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FINRA Rule 3270 Outside Business Activities (OBA) written notification requirements and passive investment exemptions.
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