Selling Away

What is selling away?

Selling away occurs when a broker or advisor recommends investments to his clients that are not approved by his firm. In most cases, the investments are not registered with the appropriate state and federal regulators. Worse yet, in many cases, the issuer is running a Ponzi scheme, affinity fraud, or some other type of illegal operation to defraud investors. These schemes usually come to light when the issuer starts to default on its repayment obligations.

 

Who is responsible for my losses in a selling away transaction?

You may have claims against the issuer of the security (i.e., the company that issued the promissory note or other investment that you purchased). In most selling away cases, the investor can also bring claims against the broker who recommended the investment and the firm where the broker works. The firm may be liable under an agency theory or because it failed to properly supervise the broker. Under FINRA rules, the firm is required to have a reasonable supervisory system in place to detect and prevent selling away. If the firm fails to detect and investigate red flags of selling away, it may be liable.

 

Can I consult with a lawyer about selling away?

If you think that you may be the victim of selling away, you should contact an experienced securities law attorney immediately. We have attorneys who specialize in these types of cases. If you would like to set up a free consultation, please call Daniel J. Broxup at (616) 632 8059.