Selling Away
Selling Away is when a financial advisor or broker conducts securities transactions without their firm's knowledge or approval. This can involve recommending investments that are not offered by their firm, which can be risky and potentially harmful to investors.
Example #1
An advisor recommends a high-risk investment opportunity to a client that is not part of the firm's approved products.
Example #2
A broker sells shares of a private company to clients without disclosing this activity to their firm.
Misuse
Misuse of Selling Away can harm consumers by exposing them to investments that may not have undergone proper due diligence. It can also lead to conflicts of interest, where advisors prioritize their own interests over those of their clients. Protecting against Selling Away is crucial to safeguard investors' interests and ensure that advisors act ethically and in their clients' best interests.
Benefits
One potential benefit of Selling Away is the opportunity for advisors to provide clients with unique investment opportunities that are not available through their firm. In cases where these investments perform well and align with the client's risk tolerance and investment goals, Selling Away can enhance a client's portfolio diversification and potentially boost returns.
Conclusion
Selling Away poses risks to consumers as it can expose them to investments that lack regulatory oversight or may not be suitable for their financial goals. It is important for consumers to be aware of this practice and ensure that their financial advisors are acting in a transparent and compliant manner. Upholding regulations that prohibit Selling Away is critical to maintaining trust and integrity in the financial industry.