If you are a victim of investment misconduct by your financial advisor and come to learn that he or she may have sold you an investment that was not approved by the brokerage firm, you may have a claim against the firm for what is known as selling away.
Selling away is when a financial advisor solicits investors to purchase securities or investments that are not held, offered, or approved by a brokerage firm.
What would motivate a financial advisor to sell an investment that’s not approved by the firm? Money. More specifically, commissions. Since the investment is not on the approved product list, the financial advisor does not have to share the commission with the brokerage firm.
Unfortunately, most cases of selling away that we see in our office involve private placements, promissory notes, and other non-public investments that end up resulting in substantial investment losses. As a general rule, selling away is a violation of the securities laws and typically, the outside investment itself, may be fraudulent.
When selling away happens, it may be an indication that the brokerage firm failed to adequately supervise the financial advisor. Although the firm may claim to be unaware that one of its financial advisors is offering unapproved outside investments, brokerage firms do have a basic duty to properly supervise the actions of their employees. In the case of selling away, it may be possible to hold the brokerage firm responsible for the losses sustained by victims of stockbroker misconduct or fraud if the firm failed to adequately supervise its financial advisor.
If you found yourself a victim of selling away, an experienced securities fraud attorney at Meyer Wilson may be able to help you recover your losses. You can call us any time at (614) 532-4576 for a free and confidential case evaluation