SIE practice questionmediumPrivate Securities Transactions
A registered representative participates in selling securities of a friend's private company without notifying the firm. This activity is known as:
- AFront-running
- BSelling away✓ Correct answer
- CInsider trading
- DFree-riding
Explanation
Why B — Selling away
Selling away refers to a registered representative participating in private securities transactions — selling or soliciting securities outside the scope of their employment — without providing prior written notice to their broker-dealer. This violates FINRA Rule 3280. If the representative receives compensation, the firm must approve and supervise the activity as if it were done through the firm. If no compensation is involved, prior written notice is still required, but the firm may simply acknowledge it.
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