According to FINRA, Mitchell Steven Morrison was fined $5,000 and suspended from association with any FINRA member in all capacities for four months for participating in private securities transactions that raised $462,500 without providing prior written notice to his member firms. Morrison and another individual created a financial technology company with Morrison serving as President and CEO.

While Morrison disclosed his involvement with the company as an outside business activity, he did not provide written notice that he intended to raise funds for the company or obtain written approval to sell membership interests. The private offering of membership interests are securities sold pursuant to Regulation D of the Securities Act, making these selling away violations.

Morrison completed quarterly and annual compliance questionnaires for one firm in which he falsely denied participating in any private securities transactions. These false statements prevented the firm from supervising the transactions and evaluating whether they were appropriate or created conflicts with his responsibilities to firm customers.

Selling away—conducting securities transactions outside firm supervision—is one of the most dangerous activities for investors because it eliminates all oversight and investor protections. Firms cannot ensure suitability, cannot supervise sales practices, and may not be able to compensate investors if problems arise. The four-month suspension and $5,000 fine emphasize that representatives must obtain firm approval before participating in any securities transactions, particularly when they involve companies where the representative has a significant interest.