According to FINRA, Jeffrey Alan Arbeit was barred from association with any FINRA member in all capacities for refusing to produce information and documents requested during a FINRA investigation.

The investigation concerned allegations made in a Form U5 filing submitted by Arbeit's member firm. The Form U5 stated that Arbeit was terminated from the firm for failing to report private securities transactions.

Private securities transactions, sometimes called "selling away," occur when a registered representative participates in securities transactions outside the regular course or scope of their employment with a member firm. FINRA rules require registered persons to provide written notice to their firms before participating in such transactions and to receive the firm's approval before participating in transactions for which they will receive compensation.

These rules exist to protect investors. When representatives conduct securities business outside their firm's knowledge and supervision, customers lose important protections. Firms cannot supervise transactions they don't know about, and customers may be exposed to unsuitable or fraudulent investments without the oversight that comes with transactions conducted through a member firm.

When FINRA sought to investigate the circumstances surrounding Arbeit's alleged unreported private securities transactions, he refused to provide the requested information and documents. Without admitting or denying the findings, Arbeit consented to the bar.

This case serves as a reminder that registered representatives have ongoing obligations to disclose their securities activities to their firms. Investors should be cautious of any investment opportunity presented by their broker that does not appear to go through normal firm channels. If a broker suggests an investment that seems separate from their firm's offerings, investors should ask questions and verify that the transaction is being properly supervised.