FINRA Rule 3280

Mandates that an associated person must give prior written notice to their member firm detailing:

• The proposed transaction.
• The person’s proposed role.
• Whether the person has received or may receive selling compensation.

If the transaction involves selling compensation, the member firm must:

• Approve or disapprove the participation in writing.
• If approved, supervise the transaction as if it were executed on behalf of through the firm.
• Record the transaction on the firm’s books and records.

If no selling compensation is involved, the firm:

• Must provide prompt written acknowledgment of the notice.
• May impose conditions on the person’s participation.

FINRA interprets the phrase “participate in any manner” broadly. Participation may include:

• Making referrals,
• Introducing parties.
• Forwarding materials.
• Facilitating communications.
• Assisting with fund transfers.

Compensation is not required for participation to exist. As a result, failing to provide required notice or obtain prior approval can constitute a compliance violation.