Generally speaking, a stock broker cannot sell investments that his or her brokerage firm does not sell. In the industry, this is called “selling away.” When a broker sells away, he is typically selling a high risk stock that pays a high commission or fee to the broker. Usually, these investments are sold in the form of limited liability partnerships and private placements. These types of sales raises a number of questions regarding suitability of the product as well as whether the broker is keeping the client’s best interest in mind by selling away. Most importantly, selling away violates FINRA (Financial Industry Regulatory Authority) regulations, as well as state and federal security laws. Investor losses associated with selling away may be compensated by the broker and/or the brokerage firm.
If you need help settling a dispute with your stock broker, financial advisor or brokerage firm please contact one of our FINRA attorneys at 855.327.7529.