Uniform Securities Agent State Law (Series 63) Practice Exam

What does "selling away" refer to in the context of securities transactions?

1. Engaging in transactions without employer consent

2. Combining customer securities for loans

3. Showing historical performance to clients

4. Representing a broker/dealer to clients

The correct answer is: Engaging in transactions without employer consent

"Sales away" in the context of securities transactions refers to the practice of engaging in securities transactions that are outside the scope of the registered representative's employment with their broker/dealer and without the necessary consent from the employer. This activity is considered a violation of regulations because it circumvents the oversight and compliance mechanisms that broker/dealers have in place to protect both their representatives and their clients. By executing trades or offering investment opportunities that are not authorized or recorded by the firm, an agent could expose themselves and their clients to unnecessary risks, such as fraud or misrepresentation. This activity can undermine the integrity of the financial services industry, which relies on transparency and accountability. The other choices may relate to practices in a broader financial context, but they do not accurately define "selling away." For instance, combining customer securities for loans does not inherently involve issues of employment consent, showing historical performance is typically part of legitimate client communication, and representing a broker/dealer to clients is a standard function of a registered representative's role, provided it is done within compliance and with proper oversight. Therefore, the first option accurately captures the essence of "selling away."