FINRA Rule 3270 requires registered representatives to provide written notice to their firm before engaging in any outside business activity (OBA). An OBA is defined as any activity for which the representative receives, or expects to receive, compensation, outside the scope of their relationship with their member firm. However, the rule provides an explicit exception for passive investments. A passive investment in a rental property, where the individual is not actively involved in management, is not considered an OBA and does not require notification. The other activities listed involve active participation for compensation and are therefore considered OBAs.

A: Selling real estate is an active business conducted for compensation (commissions) and is a classic example of an OBA requiring notification.

B: Selling health insurance is an active business where an individual acts as an agent for compensation, which qualifies as an OBA.

C: Professionally refereeing implies receiving payment for services rendered, making it a compensated activity that falls under the OBA definition.

1. Financial Industry Regulatory Authority (FINRA). FINRA Rule 3270, Outside Business Activities of Registered Persons. This rule establishes the notification requirement for OBAs. The supplementary material clarifies the scope.

Reference: FINRA Rule 3270, Supplementary Material .01, states: "For purposes of this Rule, passive investment, such as the purchase of a limited partnership interest, is not an outside business activity."

2. Financial Industry Regulatory Authority (FINRA). Regulatory Notice 18-08: Private Securities Transactions and Outside Business Activities. This notice reminds firms of their supervisory obligations and reinforces the definitions under the rules.

Reference: Page 2, "Outside Business Activities," reiterates that Rule 3270 applies to activities where a registered person has a reasonable expectation of compensation, distinguishing it from passive investments.