SIE: Outside Business Activities

Outside Business Activities

Registered persons associated with a member firm cannot accept any outside employment without first providing written notice to the firm. Even an unpaid outside activity must be reported because it requires a commitment of time. The member firm, in turn, must consider whether the outside activity will interfere with the associated person’s responsibility to the firm or be viewed by customers and the public as part of the firm’s own business. Based on the results of this review, the firm may impose conditions on the outside activity, or prohibit it outright.

Passive investments are exempt from this rule. A passive investment is one in which a person might invest or earn money through a business activity, but play no active role in its success. Income, if any, may be derived from dividends or royalties, but not a