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