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FINRA Rule 3280

Prohibits associated persons of a member from participating in private securities transactions, often called “selling away”, unless the firm is notified in writing and the transaction complies with the rule’s approval and supervisory requirements.

Rule Overview

Jurisdiction: United States

Regulator: FINRA

Topic: Conflict of Interest

Overview
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Mandates that an associated person must give prior written notice to their member firm detailing the transaction, their role, and whether they will receive selling compensation before participating in any private securities transaction.

If the transaction involves selling compensation, the firm must approve or disapprove it in writing, supervise it as if it were conducted through the firm, and record it on the firm’s books; if there’s no compensation, the firm must at least acknowledge it and may impose conditions.

FINRA interprets “participate in any manner” broadly, covering referrals, introductions, forwarding materials, facilitating communications or fund transfers, even without compensation, making failure to notify or secure approval a compliance breach.

Latest News More on FINRA Rule 3280 

Further Reading

Report on FINRA’s Examination and Risk Monitoring Program Go to https://www.finra.org/rules-guidance/guidance/reports/2021-finras-examination-and-risk-monitoring-program/obas-and-psts