A registered representative rr wants to participate in a private securities transaction which of the following actions must the
rr take

Question

A registered representative (RR) wants to participate in a private securities transaction. Which of the following actions must the RR take?

Miss Kim Fletcher · Answer

When a registered representative (RR) wants to participate in a private securities transaction, they must adhere to the guidelines set forth by the Financial Industry Regulatory Authority (FINRA) under Rule 3280, which addresses private securities transactions. The actions that the RR must take include:

Providing Written Notice: The RR must provide written notice to their employing broker-dealer about the proposed transaction. The notice should include details of the transaction, such as the nature of the securities, the role the RR intends to take, and whether they expect any compensation.
Obtaining Written Approval: The RR must receive written approval from their firm if they are to be compensated for the activity. The employing broker-dealer must agree to supervise the transaction to ensure compliance with applicable securities laws and regulations.
Follow Supervision Requirements: If the RR is receiving compensation and the broker-dealer has approved their participation, the broker-dealer must supervise the activity as it would any other transaction.

If the RR is not to be compensated (and the transaction does not involve securities currently being traded by the broker-dealer), the notification to the firm is usually sufficient, but the firm may still impose certain conditions.

Failure to follow these steps can result in disciplinary actions against the RR by regulatory bodies.

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