Business PracticesQuestion 63 of 100
An agent arranges private investments in a real estate partnership for several clients, collects a finder's fee directly from the sponsor, and never mentions the activity to his broker-dealer. This is:
a.Selling away, a prohibited private securities transaction effected without the knowledge and consent of the employing broker-dealer
b.Permitted because real estate is not a security
c.Permitted because the fee came from the sponsor rather than the clients
d.A suitability violation only
Explanation
Effecting securities transactions away from the employing firm without providing prior written notice and obtaining the firm's approval is the prohibited practice known as selling away, and it deprives the firm of its supervisory responsibility. A limited partnership interest is a security, so the real estate label does not help. The source of the compensation is irrelevant, and the violation exists even if every investment turned out to be suitable.
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