In the securities industry, stockbrokers and financial advisors are required to sell investment products that are approved and authorized by their brokerage firm. If the advisor wants to sell an investment that is not currently approved by the firm, they must get written permission from the firm prior to selling such investment, pursuant to FINRA Rule 3270. When the broker or advisor sells an investment that is not approved by the firm, that practice is often referred to as “selling away.”
Unfortunately, some brokers and advisors “sell away” from their brokerage firm, and often the products that are “sold away” from the firm are either speculative or fraudulent. This often leads to rampant fraud by the broker who is selling away. Brokerage firms often claim ignorance of these transactions and deny any liability for investor losses associated with selling away.
However, just because a product is “sold away” from a brokerage firm does not necessarily mean that the brokerage firm can completely escape liability for the acts of its broker. The brokerage firm can be liable if the broker was acting as the actual or apparent agent of the brokerage firm. Additionally, brokerage firms have a duty to reasonably supervise the activities of their brokers and financial advisors, pursuant to FINRA Rule 3110 and former NASD Rule 3010. If the brokerage firm fails to adequately supervise their brokers, the firm can be liable for the investor’s losses, including in cases where the broker sells away from his firm.
Israels & Neuman PLC is a securities law firm that represents clients in all 50 states. We represent investors in FINRA arbitration proceedings and have represented hundreds of investors who have been the victims of “selling away” schemes.
Our attorneys have represented thousands of investors against many brokerage firms in the past, including LPL Financial, Merrill Lynch, Morgan Stanley, Smith Barney, Stifel Nicolaus & Company, UBS Financial Services, Oppenheimer, Charles Schwab, Wells Fargo Advisors, Ameriprise Financial Services, Raymond James Financial Services, ProEquities, Securities America, National Securities Corp., and many others.
All of our financial arbitration cases are taken on a contingent basis, meaning that we do not get paid unless we recover compensation for you.
Aaron Israels: (720) 599-3505
David Neuman: (206) 795-5798