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Selling Away

Selling away occurs when a broker facilitates a securities transaction involving products that are not held or offered by the brokerage firm. These unauthorized products have not been subjected to the firm’s due diligence processes such as risk and compliance department review and approval. A broker might try to sell these unauthorized securities in order generate commissions for themselves, and not for the firm they work for.

Selling away often involves private placements of loans or other non-public investments such as real estate partnerships. Selling away is prohibited by both securities regulations and brokerage firm rules as the practice generates no revenue for the firm.

The fact that a brokerage firm is unaware that selling away has taken place does not necessarily exonerate the firm of responsibility for the broker’s actions and, given the right circumstances, might support a claim of lack of supervision.

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