Employee Conduct and Outside Activities
Key FINRA and MSRB rules governing outside jobs, private securities deals, gifts, and political contributions for registered reps.
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Questions Covered in This Set
10 cards to master
FINRA Rule 3270 — what does it require?
Prior WRITTEN NOTICE to the firm before working for or receiving compensation from any outside entity. It's notice, not permission — but the firm may prohibit or impose conditions.
What is a private securities transaction (FINRA Rule 3280)?
Any securities transaction outside the regular course of the rep's employment with the firm — e.g., helping a friend raise capital for a startup LP or selling shares in a private real estate deal.
Rule 3280: what if the rep WILL receive selling compensation?
The firm must give written approval or disapproval. If approved, the deal is recorded on the firm's books and supervised as the firm's own business. If disapproved, the rep may not participate at all.
Rule 3280: what if there is NO selling compensation?
The firm need only acknowledge the written notice and may impose conditions.
What is the FINRA gift limit (Rule 3220)?
$100 per person per year for gifts given in connection with the business of the recipient's employer. Firms must keep records of gifts.
What falls OUTSIDE the $100 gift cap?
Promotional items of nominal value bearing the firm's logo, bereavement gifts, and legitimate business entertainment that isn't lavish or too frequent (rep must attend).
$150 case of wine vs. $150 dinner you attend with the client
The wine is a gift and violates the $100 cap; the dinner is permissible legitimate business entertainment because the rep attends.
MSRB G-37 pay-to-play ban
A two-year ban on negotiated municipal securities business with an issuer if an MFP made a disqualifying contribution to an official of that issuer.
G-37 de minimis political contribution exception
An MFP may give up to $250 per election per candidate for whom the MFP is entitled to vote, without triggering the two-year ban.
3270 vs. 3280 in one line
3270 = notice for outside JOBS; 3280 = notice plus possible written approval for outside SECURITIES deals. Doing 3280 deals secretly is 'selling away' — a common cause of FINRA bars.
