Outside Business Activity

« Back to Glossary Index

FINRA Rule 3270 prohibits registered representatives and financial advisors from engaging in outside business activities without prior approval of their firm.

No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member. 

This rule requires registered representatives and financial advisors to provide prior written notice to their employer firm of any outside business activities, regardless of compensation and it also requires their firm to approve these activities. Even acting as a director of a non-profit without approval has been deemed to violate the rule.

« Back to Glossary Index
The Securities Lawyer