Selling away happens when a broker proposes the client to buy stock or obligations that aren't usually traded by his company. Such an offer is usually violation to security regulations of the company.
Most trading companies have their lists of traded securities. Before they are listed, they are evaluated regarding to risk level, go through due diligence, etc. Securities that are not on the list don't go through that process. Therefore, the risk of investment is not known.
The selling away is not illegal, however, because it happens in most cases when the client asks his broker about such securities. If he is informed that the risk cannot be assessed by trading company and despite this he wants to purchase such papers, the company can do this.
- Khwaja, A. I., & Mian, A. (2005). Unchecked intermediaries: Price manipulation in an emerging stock market. Journal of Financial Economics, 78(1), 203-241.
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