2.2.1.6.2. Outside Private Transactions
Private securities transactions are transactions made by an associated person outside the scope of that person’s employment. For example, if a representative sells shares in a real estate partnership that is not a product of his firm, this would be considered a private securities transaction. Also known as selling away, the practice may include purchases or sales to the firm’s own customers or to people outside the firm. In either case, associated persons are prohibited from engaging in such transactions, without first providing written notice to the member firm describing the transaction in detail, the person’s proposed role in it, and whether a selling commission will be part of the deal.
When a registered representative sells away a product, the firm will not have performed due diligence on the product. Nor will the firm have a record of the transaction or have reviewed it for cus