Presentation Transcript

1. 2013 FIRM CEOutside Business Activities

2. Objectives Be able to identify what is considered to be an outside business activity Understand the regulatory and firm rules surrounding outside business activities Develop an understanding of the consequences for violating firm and regulatory requirements pertaining to outside business activities
3. Outside Business Activity FINRA Rule 3270-No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.
4. Firm Policy Upon requested association with ProEquities, Inc., individuals will be required to first disclose all outside business activities, prior to becoming associated with the firm. Thereafter, PRIOR to engaging in any outside employment, or receiving any outside compensation, registered employees must submit their request via the firm’s Outside Business Activities Form, and receive permission from the Compliance Department, in writing.
5. Common Examples Sale of unregistered EIAs or other fixed insurance product Accounting Real Estate Sales Insurance Sales Author Retail Sales (other than securities or insurance) Independent Contractor
6. The “Grey Area” Membership to a community organization Unpaid Member of the board for a local organization such as little league baseball Spouses activities- (These must be disclosed as well) Reminder – You can’t do indirectly what you can’t do directly with ProEquities approval!
7. Private Securities Transaction Defined: Any securities transaction outside the regular course or scope of an associated person’s employment with a firm.
8. Private Securities Transactions ProEquities policy Examples: Recommending or referring a client go to another person, broker/dealer, or company to purchase a product Attempting to purchase a product directly from an individual or from a client Any personal investment with your own funds from any individual or company where the firm has not previously been informed of the account or relationship
9. NASD Rule 3040 This rule requires you to provide written notice to your firm prior to participating in any private securities transactions. You must present detailed info about the proposed transaction, your proposed role in the transaction, and whether you will be compensated from the transaction.
10. Things to consider prior to beginning an outside business activity Do I need my firm’s approval? (When in doubt ask for guidance from compliance) Will this activity present any conflicts of interest with my securities business? Will I be compensated for this activity? What are my roles and responsibilities including time commitment for this activity? Have I reviewed ProEquities policies regarding Outside business activities?
11. Annual Attestation You are required to submit an Outside Business Activity Form on an annual basis. You must disclose any material changes to your participation in the outside business activity such as expected income, time commitments, etc…
12. Consequences Failure to follow FINRA and firm policies regarding requesting permission, annual attestation and the actual participation in outside business activities may result in consequences for both you and ProEquities.
13. Questions?