According to FINRA, Venugopal Ramakrishnappa Reddy of Frisco, Texas was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for six months for participating in private securities transactions without providing prior notice to his member firm.

FINRA rules require registered representatives to notify their firms before participating in securities transactions outside their regular employment. This requirement, often called the private securities transaction rule or selling away rule, exists to ensure firms can supervise all securities activities of their representatives.

Reddy and a partner formed an investment fund and affiliated entities to raise capital for investment in early-stage technology companies. Reddy disclosed his role as co-owner and co-manager to his firm, including that the entities would engage in investment-related activities and offer fund interests to investors.

The firm approved Reddy's involvement as an outside business activity (OBA). However, the approval was for the OBA, not for participating in specific securities transactions.

Subsequently, 36 accredited investors committed $9.2 million to the fund and affiliated entities. Reddy participated in transactions involving nine of these investors and approximately $5 million by helping solicit investments and executing subscription agreements.

The distinction between OBA approval and private securities transaction approval matters. While the firm knew about Reddy's role in the entities, it did not receive the required notice before each securities transaction, which would have allowed proper supervision.

The suspension runs from August 4, 2025 through February 3, 2026. After the firm became aware of the transactions, its CEO signed forms documenting approval, but proper prior notice had not been provided.

Investors should verify that any investment offerings presented by a registered representative have been approved by their firm.