FINRA examiners are finding that more brokers are improperly selling securities or engaging in questionable activities outside their firms.

In fact, FINRA has been investigating and has brought a number of actions involving private securities transactions not approved by the firm.  FINRA has stated that, given the significant investor harm and firm financial liability, broker-dealers must have compliance programs designed to detect and prevent these violations.  Supervisory and compliance programs must prevent and detect these schemes.

The moral of this story is that broker-dealers must be vigilant by having effective compliance and supervisory programs to stop these problems before they begin.  If not, FINRA may turn its wrath on them thinking the registered representatives were actually working for the broker-dealers and not freelancing.