Series 28: Outside Business Activities

Outside Business Activities

Registered persons associated with a member firm shall not own, direct, be employed by, or accept compensation from any business or person outside the scope of the member firm without prior written notice to the firm. The member firm, in turn, must consider whether the outside activity will interfere with the associated person’s responsibility to the firm or be viewed by customers and the public as part of the firm’s own business. Based on the results of this review, the firm may impose conditions on the outside activity or prohibit it outright.

Passive investments are exempt from this rule. A passive investment is one in which a person might invest or earn money through a business activity, but play no active role in its success. Income, if any, may be derived from dividends or royalties but not a salary. For examp