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SIE: Communications & Sales Practices
SIE practice questionhardOutside Business Activities

A registered representative provides written notice of an outside business activity to her firm. The firm does not respond within 30 days. What is the representative's obligation?

  1. AThe representative may proceed, as silence constitutes approval
  2. BThe representative should not proceed until receiving explicit written approval or acknowledgment from the firm✓ Correct answer
  3. CThe representative may proceed but must notify FINRA directly
  4. DThe representative must file a separate notice with FINRA
Explanation

Why BThe representative should not proceed until receiving explicit written approval or acknowledgment from the firm

Under FINRA Rule 3270, the representative's obligation is to provide prior written notice and await the firm's response. Silence from the firm does not constitute automatic approval. Best practice — and most firms' internal policies — requires the representative to follow up and obtain explicit acknowledgment or approval before commencing the activity. If the firm fails to respond, the representative should escalate the matter within the firm rather than assume approval. Proceeding without the firm's response could expose the representative to regulatory risk if the activity later creates problems.

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