What is required by FINRA for a broker-dealer's representative when engaging in a private securities transaction?

The requirement for a broker-dealer's representative to provide prior written notification to their firm when engaging in a private securities transaction is a critical regulatory measure established by FINRA. This regulation is designed to ensure that the broker-dealer is aware of the representative's outside business activities, which allows the firm to assess any potential conflicts of interest or compliance issues that may arise from such transactions.

Providing prior written notification creates a formal record and allows the firm to maintain oversight of its employees’ activities. It is an important part of ensuring transparency and adherence to regulatory standards, which helps protect both the firm and the investing public from any adverse consequences that might result from inappropriate securities transactions.

Other choices, such as obtaining prior verbal approval or simply disclosing activity to the tax authorities, do not suffice to meet regulatory requirements, as they do not provide the necessary documented evidence or assurance of firm oversight.