Rule Atlas
FINRA Rule 3270: FINRA Rules: Outside Business Activities and Private Securities Transactions
Under FINRA Rule 3270 (FINRA / SEC / MSRB), fINRA Rules: Outside Business Activities and Private Securities Transactions establishes the authoritative rules tested on the FINRA SIE. Learn the critical distinctions and compliance requirements for registered representatives engaging in outside employment or private securities dealings under FINRA Rules 3270 and 3280. VoraPrep verifies every threshold, worked table, and practice question below against the current FINRA SIE blueprint.
Core Statutory Concepts
| Feature | FINRA Rule 3270 (Outside Business Activities) | FINRA Rule 3280 (Private Securities Transactions) |
|---|---|---|
| Activity Type | Non-securities related business | Securities related business (selling securities) |
| Compensation Factor | Does not change notice requirement | Dictates approval requirement |
| Firm Requirement (Uncompensated) | Prior Written Notice | Prior Written Notice |
| Firm Requirement (Compensated) | Prior Written Notice | Prior Written Notice AND Firm Approval |
| Firm Supervision | No direct supervision by BD | BD must supervise if approved (if compensated) |
| Risk Focus | Conflicts of interest, time commitment, reputation | Investor protection, firm's ability to supervise, fraud prevention |
A registered representative (RR) at a broker-dealer decides to start teaching weekly yoga classes at a local community center. For these classes, the RR charges a fee and expects to earn approximately $500 per month. The yoga classes are entirely separate from her responsibilities at the broker-dealer and do not involve securities. Which regulatory filing or compliance requirement applies in this circumstance?
Practitioner Application: FINRA Rules: Outside Business Activities and Private Securities Transactions
A registered representative, Alex, is approached by a friend who is starting a small tech company and asks Alex to join their board of directors and help raise capital from investors. Alex is also considering coaching a local youth sports team on weekends. How should Alex approach these opportunities to ensure compliance with FINRA rules, and what are the specific notification and approval requirements for each activity?
- FINRA Conduct Rules are designed to ensure fair and ethical conduct within the securities industry. Two critical rules, 3270 and 3280, specifically address situations where a registered person might engage in activities outside their primary employment with their broker-dealer. Understanding the nuances between these rules is paramount for maintaining compliance and avoiding disciplinary action.
- FINRA Rule 3270: Outside Business Activities (OBA) FINRA Rule 3270 dictates that a registered person must provide prior written notice to their firm before engaging in any business activity outside the scope of their relationship with the firm. This rule aims to allow firms to monitor activities that could pose conflicts of interest, impact the representative's performance, or involve the misuse of confidential client information.
Common FINRA SIE Distractors on FINRA Rule 3270
- 1Compensation Trigger: For PSTs, the presence of any compensation (cash, equity, referral fees, etc.) immediately elevates the requirement from notice-only to notice-and-approval. Test questions often hinge on this detail.
- 2'Selling Away' Implication: The term 'selling away' specifically refers to Private Securities Transactions. While OBAs are also outside the firm's business, they don't carry the same 'selling away' connotation.
- 3Outside Business Activities (OBA) (FINRA Rule 3270): Requires prior written notice to the firm.
- 4Private Securities Transactions (PST) / 'Selling Away' (FINRA Rule 3280):
- 5- If uncompensated: Requires prior written notice to the firm.
Frequently Asked Questions: FINRA Rule 3270
What is the core rule under FINRA Rule 3270 (FINRA Rules: Outside Business Activities and Private Securities Transactions)?
Under FINRA Rule 3270 (FINRA / SEC / MSRB), fINRA Rules: Outside Business Activities and Private Securities Transactions establishes the authoritative rules tested on the FINRA SIE. Learn the critical distinctions and compliance requirements for registered representatives engaging in outside employment or private securities dealings under FINRA Rules 3270 and 3280. VoraPrep verifies every threshold, worked table, and practice question below against the current FINRA SIE blueprint.
How is FINRA Rule 3270 tested on the FINRA SIE?
Compensation Trigger: For PSTs, the presence of any compensation (cash, equity, referral fees, etc.) immediately elevates the requirement from notice-only to notice-and-approval. Test questions often hinge on this detail. 'Selling Away' Implication: The term 'selling away' specifically refers to Private Securities Transactions. While OBAs are also outside the firm's business, they don't carry the same 'selling away' connotation.
Where can I practice FINRA SIE questions on FINRA Rules: Outside Business Activities and Private Securities Transactions?
Test yourself instantly with the free playable FINRA SIE question on this page, or launch VoraPrep's full FINRA SIE adaptive question bank, interactive lessons, and 1:1 exam simulator at voraprep.com/sie.