SIE (Securities Industry Essentials) Practice Exam

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What rule is violated when an agent conducts securities transactions outside their broker-dealer's purview?

The compliance rule
The selling away rule
The anti-money laundering rule
The private securities transactions rule

The correct answer is: The selling away rule

An agent conducting securities transactions outside of their broker-dealer's supervision is a violation of the "selling away" rule. This rule requires all transactions to be conducted through the broker-dealer in order to ensure proper oversight and compliance. Option A, the compliance rule, refers to the overall requirement for agents and broker-dealers to comply with regulations. Option C, the anti-money laundering rule, focuses on preventing financial crimes such as money laundering. Option D, the private securities transactions rule, requires agents to notify their firm of any private transactions and to obtain written approval. While all of these rules are related to securities transactions and may be violated in certain situations, the most relevant rule in this scenario is the selling away rule.