Sales of Private Investments by Brokers
The improper practice of an investment professional in selling securities to their clients that are not held at, or offered by, the brokerage firm with which they are associated and outside the client's account with the firm is often referred to as "selling away." These often involve investments in private limited partnerships, privately held companies, promissory notes, and real estate.
Brokers marketing such securities are required to obtain prior approval from the broker-dealer with whom they are associated and the brokerage firm is required to adequately supervise its brokers to prevent the unauthorized selling of these investments.
Your broker may be engaging in "selling away" if they tell you of a "secret" investment opportunity, offer securities that may not be typically available through the brokerage firm, or ask for payment to be rendered to a third party (or themselves).
If a client is concerned that the practice of "selling away"
is occurring, the customer should immediately contact their broker's
supervisor. In many cases, the brokerage firm is liable for the activity
and needs to take appropriate action. Any losses that may occur as a result
of the failure of the brokerage firm to supervise its brokers may be recoverable
from the brokerage firm through the pursuit of a securities arbitration claim.
The investment fraud Meyer Wilson represents clients nationwide with claims arising from the failure of brokerage firms to supervise its brokers and allow sales of inappropriate or unlicensed securities to investors. Contact the law firm of David Meyer & Associates.