Reportable Events and Outside Activities
About This Lesson
This chapter is about the things a registered person does outside the firm, or that affect their standing, and the notice and approval rules the SIE tests precisely.
What you'll cover
- Outside business activities (OBAs): prior written notice to the firm
- Private securities transactions (PSTs): notice, plus approval and supervision if compensated
- The gift rules under Rule 3220, including the $300 limit and what is exempt
- Political contributions and the MSRB Rule G-37 two-year ban
- FINRA's sanction ladder, from censure to a bar
The OBA-versus-PST distinction shows up on nearly every form of the exam, and the gift rules are tested in surprising detail. Both are worth slowing down for.
Outside Business Activities and Private Securities Transactions
When a registered person wants to do something outside their firm, the firm needs to know first. Two rules govern this, and the SIE loves to make you tell them apart.
Outside business activities (Rule 3270)
An outside business activity is any business outside the firm, securities or not, a part-time job, a rental property, a board seat, teaching a class. Before engaging in one, the rep must give the firm prior written notice. The firm can then evaluate it and may limit or reject it, but the core duty is simply to notify.
Private securities transactions (Rule 3280)
A private securities transaction is specifically a securities deal done away from the firm, selling a friend's private placement, for instance. It also requires prior written notice, but with a sharper twist: if the rep will be compensated, the firm must approve and supervise the transaction as if it were the firm's own business. Doing a private securities transaction without notifying the firm is "selling away," one of the most common triggers for FINRA enforcement.
Other reportable events
Separately, a rep must report events that bear on their record, felony charges or convictions, financial-related misdemeanors, and financial events like liens, bankruptcies, and judgments. These feed the U4 and BrokerCheck, as covered in the forms chapter.
Outside Business Activities vs. Private Securities Transactions
These two rules are frequently confused on the SIE. The key difference:
| Outside Business Activities (OBA) Rule 3270 | Private Securities Transactions (PST) Rule 3280 | |
|---|---|---|
| What is it? | Any business activity outside the firm (securities or non-securities) | Specifically a securities transaction away from the firm |
| Examples | Part-time job, rental property ownership, serving on a board, teaching, side business | Selling a friend's private placement, participating in a startup investment offering |
| Notice requirement | Prior written notice to the firm | Prior written notice to the firm |
| If compensated | Firm may impose conditions or prohibit | Firm MUST approve and supervise as if it were the firm's own transaction |
| If not compensated | Firm may impose conditions or prohibit | Firm must acknowledge but may not need to supervise |
| Violation if ignored | Failure to notify | "Selling away", a serious violation that can result in termination and bar |
"Selling away" is one of the most common reasons for FINRA enforcement actions. It occurs when a registered person participates in securities transactions outside their firm without prior written notice and approval.
Both require prior written notice to the firm. The key distinction is what happens next:
Outside Business Activity (OBA): Any job or business outside the firm, securities OR non-securities. Teaching yoga, owning a restaurant, serving on a board. The firm can restrict or prohibit it, but the main obligation is to notify.
Private Securities Transaction (PST): Specifically a securities deal away from the firm. If the rep gets compensated, the firm must approve AND supervise the transaction as if it were the firm's own, not just acknowledge it.
Doing a PST without notifying the firm = "selling away": one of the most common causes of FINRA bar proceedings.
A registered representative wants to teach investment seminars for a local community college on weekends for a fee. This is classified as:
A registered representative wants to help a friend sell shares of stock in the friend's small startup company. The transaction would occur outside the books of the representative's broker-dealer, and the representative would receive a small finder's fee. Under FINRA rules, the representative must:
Gifts and Gratuities
The gift rules get tested in more detail than their size suggests, so it pays to know the lines.
The $300 limit (Rule 3220)
A firm and its people may give no more than $300 per person per year in gifts to employees of other broker-dealers, or other entities the firm does business with. (This rose from $100 in 2026, the first change since 1992.) A few mechanics: gifts are valued at cost, event tickets at the higher of cost or face value, and the firm must aggregate everything given to one recipient over the year and keep records, reviewed by someone other than the giver.
What is exempt from the $300 limit
- De minimis and promotional items: pens, notepads, logo umbrellas and tote bags of nominal value.
- Personal gifts: a wedding or new-baby gift unrelated to the recipient's work, as long as the individual pays and the firm does not reimburse.
- Bereavement gifts: customary condolence gifts, exempt regardless of whether the firm or the individual pays, this is the key contrast with personal gifts.
- Commemorative items (deal toys, plaques) and disaster-relief donations tied to a federally declared disaster.
Business entertainment
Entertainment is not subject to the $300 limit as long as both the host and the guest attend, and it stays reasonable. The tell: tickets to a game or concert are a gift if the host does not go, but entertainment if the host attends. And a gift handed out during an entertainment event still counts toward the $300.
Who the rule covers
The limit applies to gifts to employees of institutional customers, other broker-dealers, vendors, and counterparties. It does not apply to a firm's gifts to its own people, nor to gifts to individual retail customers.
Gifts: $300/person/year (FINRA Rule 3220, effective March 30, 2026)
Political contributions (MSRB G-37): $250 threshold triggers 2-year ban
SAR filing: $5,000+ suspicious activity
CTR filing: $10,000+ cash transaction
Under FINRA Rule 3220 (as amended in 2026), the annual gift limit per person to employees of other broker-dealers is:
A registered representative gives a $75 bottle of wine to an employee of another broker-dealer and also takes the same person to a $200 dinner. What is the total amount subject to the $300 gift limit?
A representative gives a $200 gift to an employee of another broker-dealer in March, and the representative's firm separately sends that same person a $150 gift in November. Under FINRA Rule 3220, this is:
A registered representative's contact at another broker-dealer recently lost a family member. The rep's firm sends a $150 floral arrangement and charges the cost to the firm's corporate account. Under FINRA Rule 3220, this gift is:
Political Contributions
Municipal securities professionals face a special restriction on political contributions, under MSRB Rule G-37, and it is more punishing than people expect.
The de minimis exception
A muni professional may contribute up to $250 per election to an official they are entitled to vote for without consequence. But a contribution to an official they cannot vote for, even a single dollar, triggers a two-year ban on the firm doing negotiated municipal securities business with that issuer. (Competitive-bid business is not restricted.) Going over the $250 limit, even for an official you can vote for, also triggers the ban, and returning the excess does not undo it.
Who counts, and the reporting
A "municipal securities professional" is someone who solicits muni business, works in muni underwriting or trading, or supervises those who do, not every employee, only those involved in municipal securities. Firms must report all contributions by these professionals to the MSRB quarterly, regardless of amount, and the data is public.
A municipal securities professional contributes $300 to the campaign of a city mayor for whom they are entitled to vote. What is the consequence?
FINRA Sanctions and Reportable Events
When a rule is broken, FINRA has a ladder of sanctions it can impose, escalating with the seriousness of the conduct.
- Censure: a formal public reprimand, with no practice restriction.
- Fine: a monetary penalty.
- Suspension: a temporary prohibition from associating with a member firm.
- Bar: the most severe individual sanction, a permanent prohibition from associating with any FINRA member firm in any capacity.
- Expulsion: the firm-level equivalent, removing a member firm from FINRA.
Keep a bar distinct from a statutory disqualification: a bar is a sanction FINRA hands down, while statutory disqualification is a status (from certain convictions or orders) that triggers its own review. The timeline below walks through how a disciplinary matter actually proceeds.
A registered representative receives a FINRA disciplinary sanction that permanently bans them from associating with any FINRA member firm. This sanction is called a:
Chapter Essentials
The OBA-versus-PST line is the chapter's centerpiece. Both an outside business activity (any outside work, securities or not) and a private securities transaction (a securities deal away from the firm) require prior written notice. The difference is what comes next: for an OBA the firm just needs to be notified (and may restrict it), while for a compensated PST the firm must approve and supervise it as its own. A PST done without notice is selling away. On gifts, Rule 3220 caps gifts to other firms' people at $300 per person per year; business entertainment (both parties present) is exempt, as are de minimis, promotional, personal, bereavement, commemorative, and disaster gifts, with the wrinkle that bereavement gifts are exempt even when the firm pays, unlike personal gifts.
For municipal professionals, MSRB Rule G-37 allows $250 per election to an official you can vote for; exceeding that, or any contribution to one you cannot vote for, triggers a two-year ban on negotiated muni business. And FINRA's sanctions run from censure and fines through suspension (temporary) to a bar (permanent), which is distinct from the status of statutory disqualification.
This lesson reflects the latest FINRA rule changes, including the new $300 gift limit (Rule 3220, effective March 30, 2026), AI supervision guidance (Regulatory Notice 24-09), and Reg S-P 2024 amendments. Our content is current as of March 2026.
The reliable gotchas in this chapter:
• OBA = notify; compensated PST = approve and supervise. Both need prior written notice, but only a compensated private securities transaction obligates the firm to supervise it as its own. That extra step is the whole question.
• "Selling away" is a PST without notice. The violation is skipping the notice and approval, not the deal itself, private securities transactions are allowed when done properly.
• The gift limit is $300, and entertainment is separate. A meal or event where the host attends is entertainment, not a gift, so it does not count against the $300. A gift handed out at that event still does.
• Bereavement gifts are exempt even when the firm pays. That is the contrast with personal gifts (wedding, new baby), which the individual must pay for without firm reimbursement.
• G-37: $250 only for someone you can vote for. A contribution to an official you cannot vote for, even one dollar, triggers the two-year ban on negotiated muni business, and returning the money does not cure it.
• A bar is permanent; a suspension is temporary. And a bar (a sanction) is not the same as statutory disqualification (a status that triggers a review).
Test yourself with exam-style questions on this topic.