Selling Away

Unapproved or Illegal Investment Litigation 

Financial advisors are prohibited from selling investments that are not approved for sale by their firm.  This practice is known as “selling away.” Our attorneys have extensive experience litigating selling away cases against brokerage firms.  If you or someone you know has questions about a selling away case, please contact us at 212-203-9300 for a free and confidential consultation.

What is Selling Away?

The practice of a broker selling investments not sold through their brokerage firm is called “selling away.” Basically, brokers that are selling away solicits a brokerage firm’s client to buy securities that are not sold through the brokerage firm. 

This practice is prohibited and against numerous compliance and ethical rules for brokers. Selling away is also very risky since the brokerage firm does not adequately vet these investments, so it is in your investments’ interest to not engage in this type of practice with your broker. 

Why Do Brokers Engage in Selling Away?

In most cases, brokers engage in the illegal practice of selling away for two reasons – first, they want to obtain high commissions associated with extremely risky investments, or two, to avoid scrutiny from their brokerage firm’s compliance department.

Who is Responsible If Your Broker Sells You Investments That Are Not Approved Through Their Brokerage Firm?

Ultimately, brokerage firms are responsible for negligence when their brokers engage in the practice of selling away. Thus, it is in their best interest to ensure that preventative measures are in place to protect their brokerage client’s investments from brokers committing selling away.

How Would I Know If My Broker is Selling Away?

One way to protect yourself and your investments from a broker committing selling away is to check their registration status. You can do this by running the free simple search tool on Investor.gov website. 

However, having a registered broker is not a guarantee that they are not selling away. Unfortunately, a rogue broker may be actively registered or even conduct securities transactions with you for years and still practice selling away. 

Some of the red flags that you have to be on a lookout for include, but are not limited to: 

  • If the broker asks you to write a check or wire money to a different firm or person; 
  • If the broker tries to market investment without any paperwork about the said investment; 
  • If investments or deposits you made through your broker does not appear on your account statements or documents issues by their brokerage firm; or 
  • If you receive an account statement or document issued by another brokerage firm.

Thus, you must use caution if your broker requests that you sign a letter or document that gives them your consent to purchase an investment not sold through their brokerage firm. 

How Can I Protect Myself and My Investments From Selling Away?

There are three main things you can do to protect yourself from your broker selling away: 

  • Check your account statements or documents issued by any brokerage firm regarding your investments. As mentioned above, this is a usual tell-tale sign if your broker is engaging in selling away. By being on top of the account statements, you can easily report and question any inconsistent documents sent to you. 
  • Obtain written confirmation for any securities transactions that are being done on your behalf. This means getting written confirmation from your broker and their brokerage firm’s compliance department. 
  • Do independent research on your investments and transactions.

What Should I Do If I Suspect That My Broker is Selling Away? 

If you suspect that your broker is practicing selling away, you should speak up promptly to avoid risking your investments and contact an attorney immediately.  Please call us for a free consultation at 212-203-9300.  

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