Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

Engaging in private securities transactions without written prior consent of the employing Broker-Dealer directly violates FINRA's rules regarding selling away. Selling away refers to the practice where a registered representative sells securities that are not offered by their registered broker-dealer, usually a practice that occurs outside the purview and supervision of the firm.

FINRA requires that any transaction outside of what is facilitated by the employing broker-dealer must be disclosed and approved to ensure that all activities are compliant with regulatory requirements and that the firm is aware of any potential conflicts of interest. This protects both investors and the integrity of the financial markets since the broker-dealer is responsible for supervising its registered representatives and the activities they conduct.

The other scenarios, while they may involve considerations under different regulations, do not directly pertain to the violation of selling away as clearly as the noted action does. For instance, recommending services of another broker-dealer, sharing commissions, or advising on mutual fund purchases can potentially abide by FINRA rules, provided that proper guidelines and disclosures are followed. Engaging in unapproved private securities transactions compromises the broker-dealer's ability to oversee and is specifically addressed in FINRA's guidelines, making it a clear violation.