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SIE practice questionmediumOutside Business Activities

A registered representative serves on the board of directors of a local nonprofit. Under FINRA Rule 3270, which statement is correct?

  1. ANonprofit board service is automatically exempt from OBA notice requirements
  2. BThe representative must provide prior written notice to the firm, even for nonprofit activities✓ Correct answer
  3. COnly compensated board positions require disclosure
  4. DBoard service only needs to be disclosed if the nonprofit issues securities
Explanation

Why B — The representative must provide prior written notice to the firm, even for nonprofit activities

FINRA Rule 3270 requires prior written notice for ALL outside business activities, including uncompensated positions such as nonprofit board service. The rule does not distinguish between for-profit and nonprofit activities, or between compensated and uncompensated roles. The firm needs this information to evaluate potential conflicts of interest, reputational risk, and whether the activity could interfere with the representative's duties. Many firms have policies that require written approval in addition to the notice required by FINRA.

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