According to FINRA, William Savary was fined $5,000 and suspended for one year for participating in private securities transactions by executing securities purchases totaling $1,746,309 in another person's brokerage account held away from his member firms, over which he had discretionary authority, without disclosing the transactions to his firms.

Savary entered into a written trading authorization agreement granting him full investment authority over the person's self-directed brokerage account. He accessed the account online using the person's username and password and executed securities transactions. Savary received $234,532 in compensation from the account owner for his management of the account, but never disclosed any of these securities transactions to his firms.

FINRA rules require registered representatives to provide prior written notice to their member firm before participating in any private securities transaction (selling away). This rule exists so firms can supervise the activity, ensure it is appropriate, and protect customers from unsuitable or fraudulent investments conducted outside the firm's oversight.

When registered representatives manage customer accounts or execute trades away from their firm without disclosure, the firm has no ability to supervise the activity, review the suitability of investments, or protect the customer if problems arise. The fact that Savary received substantial compensation for this undisclosed activity makes it even more problematic, as it created a financial incentive that his firm knew nothing about.

Investors should be cautious if a financial professional suggests conducting investment activity through accounts away from their registered firm. Such arrangements prevent the firm from supervising the activity and may indicate the representative is trying to avoid oversight. Investors should ask whether any proposed investment or account is supervised by the broker's firm and should report any requests to conduct business away from the firm.