Outside business activity (OBA) refers to any business activity — paid or unpaid — conducted by a registered representative or associated person outside the scope of their relationship with their FINRA member firm.
Regulatory basis: FINRA Rule 3270 — registered persons must provide prior written notice to their firm before engaging in any outside business activity.
Notice requirements: - Must describe the nature of the activity, compensation, time commitment, and the name of the outside employer/business. - The firm must evaluate whether the OBA creates conflicts of interest, interferes with duties, or requires supervision. - The firm may prohibit the activity, or place conditions on it (e.g., require disclosure to clients).
Examples of OBAs: - Serving on the board of directors of a public or private company. - Part-time employment at another company. - Operating a small business. - Serving as a property manager. - Acting as a trustee for an estate.
OBA vs. Selling Away:
| | OBA (Rule 3270) | Selling Away (Rule 3280) | |---|---|---| | Activity | Any outside business | Specifically securities transactions | | Notice required | Yes | Yes (and approval if compensated) | | Firm's obligation | Evaluate conflicts | Supervise if compensated |
Consequences of failure to disclose: - Disciplinary action including fines and suspension. - Personal liability if the OBA harms clients.
> Exam tip: OBAs require prior written notice — not prior approval (unless the firm's policies require it). Selling away specifically involves securities transactions. Know the difference between OBA and selling away. Tested on SIE and Series 7.