Outside Securities Accounts
Outside securities accounts are closely related to selling away, but there is a critical distinction: disclosure and authorization. Understanding this difference is a common exam topic.
FINRA Rule 3210 - Accounts at Other Broker-Dealers
An agent who wishes to open or maintain a securities account at another broker-dealer or financial institution (other than their employing firm) must:
- Provide prior written notice to the employing broker-dealer (the "employing member")
- The employing member may then request duplicate copies of confirmations, statements, or other transactional information
The employing broker-dealer has the right to monitor the agent's outside accounts for potential conflicts of interest, front-running, or other violations.
Relationship to Selling Away
The key distinction between outside accounts and selling away is disclosure and authorization:
| Feature | Outside Securities Account | Selling Away |
|---|---|---|
| Broker-dealer knows about it | Yes - agent provided written notice | No - agent acts without firm knowledge |
| Status | Permitted (with proper disclosure) | Prohibited (without written authorization) |
| Supervision | Firm can request duplicate statements | No oversight possible |
| Rule | FINRA Rule 3210 | NASAA Dishonest Practices, Agent Section 2.b |
- An outside securities account that is properly disclosed under FINRA Rule 3210 is NOT selling away
- Selling away involves transactions the broker-dealer does NOT know about
- Outside accounts involve accounts the broker-dealer HAS been notified of
Exam Tip: Gotchas
The exam may present a scenario where an agent maintains a personal brokerage account at another firm. If the agent provided prior written notice to their employing broker-dealer, this is a properly disclosed outside account under FINRA Rule 3210 - not selling away. If the agent did not notify their employer, the activity could constitute selling away.