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Selling Away

Selling Away

“Selling away” occurs when a broker who is a registered agent of a brokerage firm sells securities that are not authorized to be sold by the brokerage firm. Brokerage firms maintain an approved products list that, in theory, constitutes products that have been subject to the broker-dealer’s due diligence and approved for sale by its registered agents. By “selling away,” the broker avoids the scrutiny of the brokerage firm and invests his or her client’s money in questionable or speculative investments. In some instances, investor funds have been put in unregistered private placements where the broker had a personal interest. In other types of questionable investments, the broker collects an unusually large commission. By “selling away,” a broker can cause significant damage to the investor.

“Selling away” is most common among smaller offices involving independent contractors that are far removed from the compliance departments of brokerage firms. The lack of oversight may be a basis for the brokerage firm’s liability. If you suspect that your broker has been “selling away” from the broker’s brokerage firm, you should consult knowledgeable counsel immediately.

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