A selling away lawyer at Weltz Law represents investors who lost money when a broker sold them investments outside the broker's own firm. These private deals skip the firm's review and often turn out to be risky or fraudulent. Even when the firm did not approve the sale, it may still answer for failing to supervise. These claims are brought in FINRA arbitration.
Our selling away lawyers work inside the FINRA dispute resolution forum on behalf of investors nationwide. FINRA stands for the Financial Industry Regulatory Authority. It oversees brokerage firms and runs the arbitration system for most disputes between investors and their brokers.
This page is part of our alternative investment attorney section, within our broader securities lawyer practice.
Our seasonsed attorneys have over 30 years of collective experience, and our committed to protecting investors rights. Call today or contact us through our site.
☎ Call NowSelling away happens when a registered broker sells or promotes an investment that their brokerage firm has not approved and does not know about. The deal takes place "away" from the firm. Because the firm never reviewed it, the investor loses the protection that normal supervision is supposed to provide.
FINRA rules require brokers to tell their firm in writing before taking part in any private securities transaction. In many cases, the firm must approve it. Brokers must also disclose outside business activities.
Selling away breaks those rules. The broker may earn a commission, a referral fee, or a stake in the business. Often, the investor has no idea the deal is not coming through the firm at all.
For a quick overview, see our article on what selling away is.
A private securities transaction is any securities sale a broker takes part in outside the regular course of their job at their firm. It can include recommending, arranging, or helping close a deal, even if the broker is not paid. When the broker keeps it hidden from the firm, it becomes selling away.
Brokers sometimes argue they were "just making an introduction." That defense often falls flat. Taking part in the sale in any meaningful way can count.
Think of a broker who sends clients to a friend's real estate fund or helps them fill out subscription papers. Talking up a local startup can count too.
Investments sold away from a firm are often private, unregistered, and hard to verify. Common examples include promissory notes, private placements, real estate deals, oil and gas programs, and crypto schemes. Some involve the broker's own business or a friend's company.
Common selling away products include:
Many of these deals are legitimate when sold properly. Sold away, they skip every check the firm is supposed to provide.
Warning signs include a broker asking you to keep a deal quiet, paperwork without the firm's name, and checks made out to an outside company. Investments missing from your statements are another clue. A broker who says the deal is "too exclusive" for the firm is a red flag too.
The clearest sign is often missing. If you invested through your broker but the investment never appears on your account statement, the firm may not know about it.
Other signs are subtle. The broker uses a personal email or phone for the deal. Payments go by wire to a company you have never heard of. You are told the firm "doesn't do these kinds of deals, but I can get you in."
Here is a common line: "Don't mention this to anyone at the office. It could get me in trouble." That sentence alone is a strong reason to stop and ask questions.
Yes. A brokerage firm may be responsible for selling away losses if it failed to supervise its broker. Firms must have reasonable systems to catch outside activity, actually use those systems, and investigate red flags. A firm that ignored warning signs may face a failure to supervise claim.
Firms often argue they had no idea. But the question is not only what the firm knew. It is also what the firm should have known with reasonable supervision.
FINRA arbitration panels may look at three questions. Did the firm have a reasonable system to detect outside business and private deals? Did it actually follow that system, rather than leave it on paper? And did it look into red flags, such as complaints, unusual money movement, or a broker's lifestyle that did not match their income?
Firms are not expected to prevent every violation. They are expected to take reasonable steps. Learn more on our failure to supervise page.
Firms should watch for customer money moving to unknown outside companies and brokers with undisclosed side businesses. Complaints about unfamiliar investments and past discipline are red flags too. Many selling away schemes leave a trail a careful firm could have spotted.
Money movement is often the biggest clue. Repeated wires or checks from several customer accounts to the same small company should prompt questions.
Email review is another tool. Firms review broker emails and messages. Talk of private deals can surface there, if anyone is looking.
A broker's BrokerCheck record matters too. BrokerCheck is FINRA's public database of a broker's licenses, jobs, and complaints. A history of outside activity problems should lead to closer oversight.
Selling away victims may be able to bring a FINRA claim when the seller was a registered broker at a FINRA member firm. The claim can name the broker and the firm. Claims often include failure to supervise, fraud, misrepresentation, and unsuitable recommendations.
FINRA arbitration can apply even when the investment was not held at the firm. What matters is that the broker was associated with the firm and the customer had a relationship with that broker.
Related claims may include misleading information, unsuitable investment recommendations, and, when the broker took client money directly, broker theft.
When the seller was never registered with a FINRA member firm, FINRA arbitration may not apply.
Long-time clients who trust their broker are most often harmed. Retirees, widows, and members of close-knit communities are frequent targets. The broker uses that trust to sell deals the client would never have bought from a stranger.
Picture a couple who has worked with the same broker for 15 years. He tells them about a local real estate project paying 12% a year. They write a check to the developer. Two years later, the project collapses, and they learn the firm never knew about it.
When older clients are involved, selling away may also raise concerns about financial elder abuse.
The FINRA eligibility rule generally bars claims filed more than six years after the event that caused the dispute. For selling away, that is often the date of the investment. State deadlines may also apply and can be shorter.
Selling away schemes often run for years before they collapse. Investors may keep receiving interest checks the whole time.
By the time the truth comes out, early investments may be near the six-year mark. Our selling away lawyers check every investment date early in a review.
A FINRA panel may consider the money an investor lost, what that money might have earned in suitable investments, interest, and costs. The panel decides which measures fit the facts. No one can say in advance what a panel will award.
Out-of-pocket damages compare what went in with what came back, including any interest or distributions. Well-managed account damages ask what the money would have earned in investments that matched the investor's goals.
Some selling away cases also raise questions about punitive damages, which a panel may consider in limited situations. The firm's supervision records and the money trail shape the arguments our FINRA arbitration attorneys can make.
Gather any documents for the outside investment, cancelled checks or wire records, interest payment records, your brokerage statements, and every communication with the broker. These records show who sold the deal, where your money went, and whether it ever passed through the firm.
Compare your brokerage statements to what you invested. Anything missing from the statements may be a sign it was sold away.
Texts, personal emails, and business cards matter too. If something is missing, the brokerage firm keeps its own records, and many can be requested during discovery.
Our selling away lawyers start by tracing the deal and the money. Who offered the investment, was that person registered with a brokerage firm, and where did your funds go? Those answers shape whether a FINRA claim fits and which claims to bring.
Our team checks the broker's BrokerCheck history and any outside activity disclosures. The review also looks for red flags the firm should have caught.
If the facts support a claim, our FINRA arbitration attorneys draft and file the Statement of Claim. That is the written filing that starts a FINRA case.
Discovery follows. Our team asks for the firm's supervision policies, email review records, outside activity files, and money movement alerts.
If the case reaches a final hearing, our selling away lawyers present the evidence and witnesses to the panel. No one can predict how a panel will rule. Our page on FINRA arbitration explains each stage.
Did your broker sell you an investment that never showed up on your brokerage statements? It may be worth a closer look. A conversation with a selling away lawyer can help you understand what options may exist in FINRA arbitration.
Our selling away lawyers represent investors, retirees, families, and trusts nationwide. Bring any deal documents, payment records, and messages from your broker. Contact Weltz Law today to talk through what happened.
Our seasonsed attorneys have over 30 years of collective experience, and our committed to protecting investors rights. Call today or contact us through our site.
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