This page deals with the activities that employees – more technically, associated persons – of broker-dealers may conduct that are not for the benefit of their employers. Very generally speaking, these activities fall into three categories:
There is substantial overlap among all three of these activities; thus, for the purposes of categorizing materials on the Cabinet taxonomy, we combine the terms Outside Business Activities and Private Securities Transactions. While we categorize Personal Account Trading separately, the relevant materials – and, particularly, the enforcement actions – tend to overlap with Private Securities Transactions.
In the case of all of these activities, an employee generally must provide notice to the employing broker-dealer and receive permission to engage in an activity. As to Personal Account Trading and Private Securities Transactions, the employer would remain under an obligation to supervise the employee's conduct (e.g., to monitor the employee's trading). A good number of enforcement cases involve an employee's failure to notify the employer; in many cases (though not all) it was because the employee was engaged in some substantively improper activity.