Selling Away | Minnesota Securities Attorney

Selling Away Securities

Selling Away

Selling away occurs when a broker facilitates a securities transaction involving products that are not held or offered by the brokerage firm. These unauthorized products have not been subjected to the firm’s due diligence processes such as risk and compliance department review and approval. A broker might try to sell these unauthorized securities in order generate commissions for themselves, and not for the firm they work for.

Selling away often involves private placements of loans or other non-public investments such as real estate partnerships. Selling away is prohibited by both securities regulations and brokerage firm rules as the practice generates no revenue for the firm.

The fact that a brokerage firm is unaware that selling away has taken place does not necessarily exonerate the firm of responsibility for the broker’s actions and, given the right circumstances, might support a claim of lack of supervision.

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Broker Fraud: What is Selling Away?

Selling away occurs when a broker sells you a product that is not approved by the broker's firm. The broker is "selling away" from the firm or participating in an "outside business activity." Your broker and the brokerage firm (even if it is unaware of the selling away) may be liable to you for your