Outside Securities Accounts

Closely related to the selling away prohibition, FINRA Rule 3210 governs what happens when an agent maintains accounts at firms other than their employer.

FINRA Rule 3210: Accounts at Other Broker-Dealers and Financial Institutions

An associated person (agent) who opens or maintains a securities account with another broker-dealer or financial institution must:

  1. Notify their employing broker-dealer (BD) in writing before opening the account
    • If the account predates employment, notification must be made within 30 calendar days of becoming associated
    • Must obtain the employer's written consent to maintain the account
  2. Notify the executing BD or financial institution in writing of their association with the employing BD

Both notifications are required. The agent must tell the employer about the outside account, and the other firm must be told about the agent's association.

Exam Tip: Gotchas

  • Rule 3210 requires notification to BOTH firms. Many exam questions test whether only one notification is required. Both are required: the employing BD and the executing firm.
  • Written consent is also required. Notification alone is not enough. The agent must obtain the employer's written consent to maintain the outside account.

Duplicate Statements

  • The employing BD may request duplicate confirmations and statements from the executing firm
  • The executing BD or financial institution must comply with such requests
  • This allows the employer to monitor all trading activity by its agents

Purpose

Rule 3210 serves multiple protective functions:

  • Prevents agents from hiding trading activity from their employer
  • Allows monitoring for conflicts of interest, insider trading, front-running, and other violations
  • Works alongside the selling away prohibition. Even if a trade is on another BD's books, the employing BD must know about the account

Scope

  • Applies to accounts in which the associated person has a beneficial interest
  • Includes accounts of immediate family members if the agent has a beneficial interest or exercises control (e.g., minor children residing in the household, financially dependent children)
  • Does not apply to accounts holding only non-securities products (e.g., bank savings accounts, insurance policies)
  • Exemptions: Accounts limited to unit investment trusts, municipal fund securities, 529 plans, variable contracts, or redeemable shares of registered investment companies

Exam Tip: Gotchas

  • Family accounts count. If an agent has beneficial interest or control over a spouse's or minor child's brokerage account, Rule 3210 notification applies to that account too.