Outside Business Activity

Challenges with Outside Business Activity Disclosures

An outside business activity (“OBA”) is defined as a registered person having any business activity outside the scope of the relationship with their member firm. As defined in FINRA Rule 3270, this may include acting as an employee, independent contractor, sole proprietor, officer, director, or partner for any other entities besides the member firm. Generally, the activity may also involve compensation or a reasonable expectation of compensation.

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Disclosures and Attestations for Associated Persons

Associated person disclosures and attestations are not a “one size fits all” list of documents. The purpose of disclosures and attestations is to educate your employees on the expectations of the firm based on firm procedure and regulatory mandates. Another important purpose is to give representatives a chance to know relevant updates and changes that may require pre-approval and/or added compliance responsibilities.

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Form U4

The Importance of Form U4 Disclosure Updates

Failure to timely update information on an individual form U4 may lead to potential fines and suspensions for a registered person, especially if the act is willful. Examinations and sweeps performed by FINRA generally reveal exceptions.

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