“Selling away” is when a registered representative sells an investment outside the firm's approved products and away from its books — often a private placement, a promissory note, or, in the worst cases, a Ponzi scheme. Even though the investment was off-book, the firm can be liable for failing to supervise the representative who sold it.
Firms are required to supervise the outside activities of their representatives and to have systems that detect selling away. The failures below are what turn an off-book fraud into a claim against a solvent defendant.
A representative sold investments — private placements, promissory notes, real-estate deals, funds — that the firm did not approve and did not carry on its books, in violation of the firm's supervisory obligations.
High-commission private offerings sold outside the firm's due-diligence and approval process, often to the representative's existing customers who trusted the firm's name.
Schemes promising steady, above-market returns that were paid from new investor money — frequently sold through a licensed representative whose firm failed to supervise the outside activity.
The firm's failure to act on outside-business-activity disclosures, unusual fund movements, customer complaints, or other red flags its own procedures required it to monitor under FINRA Rule 3110.
In selling-away and Ponzi matters, the promoter is often insolvent, imprisoned, or gone. The strategy centers on identifying every solvent, responsible party.
The representative's firm, for failing to supervise the outside activity — frequently the primary and most collectible source of recovery.
Branch managers and OSJ supervisors whose failure to review the representative's conduct enabled the selling away to continue.
The individual who sold the investment, and any related entities through which the funds moved, where assets can be identified.
Custodians, feeder funds, professional service providers, and errors-and-omissions coverage that may respond to the loss.
Initial inquiries are reviewed personally and treated as confidential whether or not we ultimately work together. We respond to substantive case inquiries within one business day. There is no cost or obligation associated with the initial review.
Florida-based, available nationally for court, AAA, and FINRA matters across the United States.