See Principal Considerations in Introductory Section
1. The dollar volume of sales.
2. The number of customers.
3. The length of time over which the selling away activity occurred.
4. Whether the product sold away has been found to involve a violation of federal or state securities laws or federal, state or SRO rules.
5. Whether the respondent had a proprietary or beneficial interest in, or was otherwise affiliated with, the selling enterprise or issuer and, if so, whether respondent disclosed this information to his or her customers.
6. Whether respondent attempted to create the impression that his or her employer (member firm) sanctioned the activity, for example, by using the employer's premises, facilities, name and/or goodwill for the selling away activity or by selling a product similar to the products that the employer (member firm) sells.
7. Whether the respondent's selling away activity resulted, either directly or indirectly, in injury to the investing public and, if so, the nature and extent of the injury.
8. Whether the respondent sold away to customers of his or her employer (member firm).
9. Whether the respondent provided his or her employer firm with verbal notice of the details of the proposed transaction and, if so, the firm's verbal or written response, if any.
10. Whether the respondent sold away after being instructed by his or her firm not to sell the type of the product involved or to discontinue selling the specific product involved in the case.
11. Whether the respondent participated in the sale by referring customers or selling the product directly to customers.
12. Whether the respondent recruited other registered individuals to sell the product.
13. Whether the respondent misled his or her employer (member firm) about the existence of the selling away activity or otherwise concealed the selling away activity from the firm.
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Associated Person
Fine of $5,000 to $73,000.1
Member Firm
Where member firm receives written notice of a private securities transaction, but fails to provide written notice of approval, disapproval or acknowledgement, fine of $2,500 to $15,000.2 |
Associated Person
The first step in determining sanctions is to assess the extent of the selling away, including the dollar amount of sales, the number of customers and the length of time over which the selling away occurred. Adjudicators should consider the following range of sanctions based on the dollar amount of sales:
• Up to $100,000 in sales: 10 business days to 3 months
• $100,000 to $500,000: 3 to 6 months
• $500,000 to $1,000,000: 6 to 12 months
• Over 1,000,000: 12 months to a bar
Following this assessment, Adjudicators should consider other factors as described in the Principal Considerations for this Guideline and the General Principles applicable to all Guidelines. The presence of one or more mitigating or aggravating factors may either raise or lower the above-described sanctions.
Member Firm
Where member firm receives written notice of a private securities transaction, but fails to provide written notice of approval, disapproval or acknowledgement, consider suspending responsible supervisory personnel in any or all capacities for up to two years.
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