SCHINDLER, J.

¶ 1 Mark M. Garrison was a licensed investment advisor and co-owner of a financial advice firm, Acumen Financial Group Inc. In 1999, Mark1 entered into an independent contractor agreement with AIG Financial Advisors Inc. to act as a registered securities representative (stockbroker). In 2002, Mark's grandparents Jack and Charlotte Garrison established the Garrison Family LLC. In 2006, Jack and Charlotte transferred all of the assets of the LLC to the Jack M. Garrison and Charlotte L. Garrison Revocable Trust (Revocable Trust). The Revocable Trust designates Jack and Charlotte as the cotrustees and income beneficiaries, and names Mark and his sister Lesa B. Neugent as the remainder beneficiaries. The Garrison Family LLC and the Revocable Trust held approximately $26 million in two brokerage accounts at Wells Fargo Investments LLC. After Charlotte died in August 2006, Jack appointed Mark as the sole manager and trustee of the Garrison Family LLC and the Revocable Trust.

¶ 2 In April 2011, Jack Garrison, Lesa Neugent, the Revocable Trust, and the trusts created after Charlotte's death (collectively Garrison Trusts) filed a lawsuit against Mark and SagePoint Financial, formerly known as AIG Financial Advisors Inc., alleging joint and several liability for the loss of more than $20 million and claims of breach of fiduciary duty; negligent supervision; violation of the "Washington State Securities Act" (WSSA), chapter 21.20 RCW; and respondeat superior. AIG filed a motion for summary judgment dismissal arguing that under National Association of Securities Dealers (NASD) Rule 3050, Transactions for or by Associated Persons (amended effective Oct. 15, 2002), AIG had no duty to supervise the transactions in the Wells Fargo accounts. The Garrison Trusts filed a cross motion for summary judgment, arguing AIG owed a duty to supervise under NASD Rule 3040, Private Securities Transactions of an Associated Person (amended effective March 23, 2004). In the alternative, the Garrison Trusts argued AIG had a duty to investigate and monitor the suspicious activity in the Wells Fargo brokerage accounts. The court granted AIG's motion for summary judgment and dismissed the claims against AIG. We affirm dismissal of the respondeat superior claim against AIG. Because there are material issues of fact as to whether AIG knew or should have known by October 2007 that Mark was acting as an investment advisor for compensation triggering a duty under the NASD Rules to either supervise the securities transactions in the Wells Fargo brokerage accounts or to investigate and monitor the securities transactions in the Wells Fargo accounts, we reverse summary judgment dismissal on the claims against AIG for negligent supervision and violation of the WSSA.

FACTS

¶ 3 Mark M. Garrison was a licensed investment advisor registered with the United States Securities and Exchange Commission (SEC). Beginning in 1995, Mark was co-owner of a financial investment advice firm in Bloomington, Minnesota, Acumen Financial Group Inc.

¶ 4 In 1999, Mark entered into an "Independent Contractor Agreement for Registered Representative" with AIG Financial Advisors Inc.2 AIG is a securities broker-dealer registered with the SEC and a member of the National Association of Securities Dealers (NASD).3 As a licensed registered securities representative or stockbroker, Mark also registered with the SEC.

¶ 5 As part of the Independent Contractor Agreement with AIG, Mark agreed to comply with "the statutes, rules, regulations and statements of policy of the [SEC], the Conduct Rules of the NASD and any state securities and insurance laws and regulations," and AIG policies and procedures. Mark agreed to notify AIG "in writing of any out-side business activity prior to engaging in such activity."4 The Independent Contractor Agreement states, in pertinent part:

¶ 6 Mark's grandparents Jack M. Garrison and Charlotte L. Garrison owned a shipping company. In 2002, Jack and Charlotte established the Garrison Family LLC, transferring approximately $11 million to the LLC. Jack and Charlotte were the sole shareholders and Jack was named the manager of the LLC. The Garrison Family LLC assets were held in brokerage accounts at the Seattle branch of Wells Fargo Investments. Jack worked with Wells Fargo registered securities representatives Jean Adams and Rebbie Thomas.

¶ 7 In 2006, Jack and Charlotte established the Jack M. Garrison and Charlotte L. Garrison Revocable Trust. Jack and Charlotte transferred their Garrison Family LLC shares plus approximately $16 million into the Revocable Trust. The "Revocable Living Trust Agreement" designates Jack and Charlotte as the cotrustees and lifetime beneficiaries of the trust, and names their grandchildren Mark M. Garrison and Lesa B. Neugent as the remainder beneficiaries, with a 62 percent interest allocated to Mark and a 38 percent interest to Neugent. The Revocable Trust directs the creation of several other trusts upon the death of either Jack or Charlotte — an exempt marital trust, a marital trust, a survivor trust, an exempt family trust for the benefit of Neugent, and an exempt family trust for the benefit of Mark.6

¶ 8 Charlotte died on August 8, 2006. Shortly after her death, Jack was diagnosed with dementia. On September 11, 2006, Jack resigned and appointed Mark as the manager of the Garrison Family LLC and the trustee of the Revocable Trust.

¶ 9 Over the years, Jack had invested conservatively in the Wells Fargo brokerage accounts. In September 2006, the assets in the Wells Fargo accounts for the Garrison Family LLC and the Revocable Trust totaled approximately $26.5 million, consisting of approximately $21.8 million in the LLC brokerage account, $4.6 million in the Revocable Trust brokerage account, and $120,000 in the LLC checking account.

¶ 10 In compliance with NASD Rule 3050, on October 6, 2006, Wells Fargo sent a letter requesting approval of Mark's appointment as "trustee, owner and manager on accounts held with our firm." The letter states, in pertinent part:

¶ 11 On October 16, 2006, Mark's assistant faxed the Wells Fargo letter to the AIG Compliance Department. The cover sheet states, in pertinent part:

¶ 12 On November 14, 2006, the AIG Compliance Department sent Mark a "Letter of Understanding for Acting as Trustee/Owner/Manager on the Garrison Wells Fargo Accounts." The letter states that AIG does not object to Mark acting as the "trustee/owner/manager" on the conditions that Mark does not act as a registered representative/stockbroker and that he complies with the requirements to disclose annually his out-side business activity on the AIG "Outside Business Activities Questionnaire" (OBAQ). The November 14 letter states, in pertinent part:

¶ 13 On November 22, the AIG director of branch supervision, Leslie Ayers, sent a letter to Mark approving maintaining the brokerage accounts at Wells Fargo as the trustee, owner, and manager subject to his compliance with NASD regulations and AIG policies, receipt of duplicate "confirms and statements" from Wells Fargo for the accounts, and monitoring by the "First Line Supervisor." The November 22 letter states, in pertinent part:

¶ 14 Attached to the letter is an addendum describing the "First Line Supervisor Responsibilities for Outside Personal Brokerage Accounts." The addendum lists a number of "[p]rohibited activities," including insider trading, prearranged trading, adjusted trading, "Wash or Cross Transactions," "Front running," and "Freeriding." The addendum also states, "If the RR has a large number of trades every month, the FLS should perform a quarterly profit and loss analysis to determine whether the RR's account has large losses (increasing incentive to churn their clients' accounts)." From April 2006 through April 2009, Director of Branch Supervision Ayers was responsible for "supervising the [AIG] personnel who monitored the transactions in personal brokerage accounts in the name or for the benefit of [AIG] registered representatives, including Mark M. Garrison, held at other broker-dealers." Michelle Nielsen reported to Ayers and was the First Line Supervisor for the Wells Fargo brokerage accounts.

¶ 15 In December 2006, Mark submitted his annual OBAQ to AIG for 2005 to 2006. Mark states he is not an AIG "investment provider representative" but reports that he is a registered investment adviser and owns Acumen, "an independent registered investment adviser, separate from [AIG]." Mark states he is registered as an investment advisor in approximately 20 states and receives compensation from commissions, hourly estate planning fees, and asset-based fees. Mark also states he understands "that with respect to investment advisory activities," he "must make clear to clients that such investment advisory activities are separate from the broker-dealer [AIG] and are not offered by the broker-dealer [AIG]." In the OBAQ, Mark states that the percentage of time he spends as an investment advisor with Acumen is 26 to 50 percent and that he receives compensation over $50,000.

¶ 16 Under the 2005 to 2006 OBAQ section "Other Activities," Mark states that "I have been named the Trustee/Owner/Manager on accounts held at Wells Fargo Investments in Seattle, WA, for my grandfather — Jack Garrison." Mark reports spending "0-25%" of his time "conducting this activity" and receiving "[u]nder $10,000" annually.

¶ 17 On March 14, 2007, Mark sent an e-mail to Wells Fargo stockbrokers Jean Adams and Rebbie Thomas and the accountant for the Revocable Trust, Hal Carrothers, stating that he planned to hire Acumen to provide investment advice to the Garrison Family LLC and the Garrison trusts but that Wells Fargo would continue to execute trades. The e-mail states, in pertinent part:

¶ 18 On March 16, 2007, Mark wrote a check to Acumen in the amount of $65,524 from the Garrison Family LLC account for "Investment Advisory Services" in the fourth quarter of 2006. Mark also wrote a check to Acumen in the amount of $13,905 from the Revocable Trust account.

¶ 19 Mark submitted his 2007 annual OBAQ to AIG on October 30, 2007. Mark reports his outside business activity and compensation as an independent registered investment advisor and co-owner of his independent investment business Acumen. In a separate section under "Other: Outside Business Activities," Mark reports that he is "actively engaged" as the "named ... Trustee/Owner/Manager on accounts held at Wells Fargo Investments in Seattle, WA, for my grandfather — Jack Garrison." Mark also reports it is an "[i]nvestment related activity"10 conducted by Acumen, a "Registered Investment Advisor." Mark states that he spends 16 hours per month and receives annual compensation of "$25,000 to $50,000."

¶ 20 In late 2007, Mark submitted a written request to AIG seeking approval to open personal brokerage accounts at TD Ameritrade. In December 2007, AIG approved the request in writing for the "personal brokerage accounts held at TD Ameritrade in the name of Mark Garrison including Account No. 789-930283, and ... an account in the name of Michelle Garrison, Account No. 789-654167." AIG instructed Mark to provide duplicate copies of "confirmation slips and account statements" for the TD Ameritrade accounts.

¶ 21 On April 22, 2011, Jack M. Garrison, the Garrison Family LLC, and Mark's sister Lesa B. Neugent, individually and as trustee of the Jack M. Garrison and Charlotte L. Garrison Revocable Trust, the Jack M. Garrison Survivor's Trust, the Charlotte L. Garrison Marital Trust, the Charlotte L. Garrison Exempt Marital Trust, the Charlotte L. Garrison Exempt Family Trust for the benefit of Mark Garrison, and the Charlotte L. Garrison Exempt Family Trust for the benefit of Lesa Neugent (collectively the Garrison Trusts), filed a lawsuit against Mark and Michelle Garrison and AIG for "Securities Law violations, Breach of Fiduciary Duty, Negligence and Other Claims, and for Declaratory Judgment."

¶ 22 The Garrison Trusts allege that Mark transferred $9.6 million from the Garrison Family LLC and the Revocable Trust brokerage accounts at Wells Fargo to personal accounts at TD Ameritrade, that during 2008 and 2009 Mark paid Acumen over $550,000 in investment advisory fees and paid himself more than $370,000 in trustee fees, and that Mark's speculative and high-risk investments during 2008 resulted in a loss of over $20 million, leaving the "combined net value of all of the Plaintiffs' accounts, including the Garrison Family LLC, ... to just under $200,000."11 The complaint asserts AIG is jointly and severally liable for the loss of over $20 million and alleges claims against AIG for negligent supervision; violation of the Washington State Securities Act (WSSA), RCW 21.20.010; and liability under a respondeat superior theory. The complaint also asserts Wells Fargo is jointly and severally liable but states the contractual duty to arbitrate precludes "nam[ing] Wells Fargo as a defendant in this action."12

¶ 23 AIG filed an answer denying liability and a cross claim for indemnification against Mark. AIG denied that it owed any duty to the Garrison Trusts and asserted it had no notice that Mark acted as an investment advisor for the Garrison Trusts or participated in private securities transactions in the Wells Fargo brokerage accounts.

¶ 24 AIG filed a motion for summary judgment dismissal of all claims. In support, AIG submitted the declaration of expert witness David E. Paulukaitis, a managing director of Mainstay Capital Markets Consultants Inc. Paulukaitis states, in pertinent part:

¶ 25 The Garrison Trusts filed a motion for partial summary judgment on the grounds that AIG owed a duty to supervise the securities transactions in the Wells Fargo brokerage accounts. The Garrison Trusts submitted the declaration of expert witness John H. Chung, a chief compliance officer at three NASD member firms. Chung disagreed with AIG expert Paulukaitis. Chung states that when Mark acted as an investment advisor for compensation, AIG had a duty to supervise under NASD Rule 3040. Chung also states that AIG had a duty under NASD Rule 3050 to exercise "appropriate supervision." In his declaration, Chung states, in pertinent part:

¶ 26 The court denied the Garrison Trusts motion for partial summary judgment and granted the motion for summary judgment dismissal of the claims against AIG. AIG agreed to dismiss the cross claim against Mark, and the parties stipulated to entry of a final judgment under CR 54(b).

ANALYSIS

¶ 27 The Garrison Trusts contend the trial court erred by granting summary judgment dismissal of the claims against AIG for negligent supervision, violation of the WSSA, and respondeat superior.

¶ 28 We review summary judgment de novo and consider all the facts and reasonable inferences in the light most favorable to the nonmoving party. Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 501, 115 P.3d 262 (2005); Michael v. Mosquera-Lacy, 165 Wn.2d 595, 601, 200 P.3d 695 (2009). Summary judgment is appropriate if the pleadings, depositions, and affidavits show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). A material fact precluding summary judgment is a fact that affects the outcome of the litigation. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 164-65, 273 P.3d 965 (2012). Where there are competing inferences that may be drawn from the evidence, the issue must be resolved by the trier of fact. Johnson v. UBAR, LLC, 150 Wn.App. 533, 537, 210 P.3d 1021 (2009).

Negligent Supervision

¶ 29 The Garrison Trusts contend that under NASD Rule 3040, AIG had a duty to supervise Mark's activities as an investment advisor for the Garrison Trusts. In the alternative, the Garrison Trusts assert that the monthly statements and trading confirmations received by AIG in accord with NASD Rule 3050 triggered the duty to investigate and monitor the activity of the Wells Fargo accounts.13

¶ 30 "The theory of negligent supervision creates a limited duty to control an employee for the protection of third parties, even where the employee is acting outside the scope of employment." Niece v. Elmview Grp. Home, 131 Wn.2d 39, 51, 929 P.2d 420 (1997). To establish a claim for negligent supervision, the Garrison Trusts must show (1) Mark acted outside the scope of his employment with AIG; (2) he presented a risk of harm; (3) AIG knew, or should have known in the exercise of reasonable care, that Mark posed a risk to others; and (4) AIG's failure to supervise was a proximate cause of the loss. LaPlant v. Snohomish County, 162 Wn.App. 476, 479 n. 7, 271 P.3d 254 (2011). An employer is not liable for negligently supervising an employee whose conduct was outside the scope of the employment unless the employer knew, or in the exercise of reasonable care should have known, the employee presented a risk of danger to others. Thompson v. Everett Clinic, 71 Wn.App. 548, 555, 860 P.2d 1054 (1993) (citing Peck v. Siau, 65 Wn.App. 285, 294, 827 P.2d 1108 (1992)). The existence of a duty is usually a question of law that we review de novo. Aba Sheikh v. Choe, 156 Wn.2d 441, 448, 128 P.3d 574 (2006). However, "where duty depends on proof of facts that are disputed ... summary judgment is inappropriate." Hymas v. UAP Distribution, Inc., 167 Wn.App. 136, 150, 272 P.3d 889 (2012).

¶ 31 The Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. sections 78a-78mm, and its amendments create a detailed, comprehensive system of federal regulation of the securities industry. Swirsky v. Nat'l Ass'n of Sec. Dealers, 124 F.3d 59, 61 (1st Cir.1997). The Exchange Act authorizes self-regulatory organizations to promulgate their own governing rules and regulations subject to extensive oversight and control by the SEC. Mayo v. Dean Witter Reynolds, Inc., 258 F.Supp.2d 1097, 1101 (N.D.Cal. 2003). Congress granted the SEC broad supervisory responsibilities over a system of supervised self-regulation in the securities industry. See S. REP. No. 73-792 (1934). "[T]he congressional aim in supervised self-regulation is to insure fair dealing and to protect investors from harmful or unfair trading practices." Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U.S. 117, 130, 94 S.Ct. 383, 38 L.Ed.2d 348 (1973).

¶ 32 NASD is a self-regulatory organization registered with the SEC. The Exchange Act authorizes the NASD "to develop and enforce rules of professional conduct for its member firms, subject to oversight by the SEC." Gurfel v. Sec. & Exch. Comm'n, 340 U.S.App. D.C. 292, 205 F.3d 400, 400 (2000) (citing 15 U.S.C. § 78o-3): see also 4 Thomas Lee Hazen, Treatise on The Law of Securities Regulation 87, 89 (5th ed.2005). With some limited exceptions, all NASD rules, policies, practices, and interpretations must be approved by the SEC. See 15 U.S.C. § 78s(b)(1); Swirsky, 124 F.3d at 62; Fiero v. Fin. Indus. Regulatory Auth., Inc., 660 F.3d 569, 572 (2d Cir.2011). The SEC requires NASD rules and regulations conform to the Exchange Act. See 15 U.S.C. §§ 78f(b), 78o-3(b). Under the Maloney Act of 1938, 15 U.S.C. § 78o-3 et seq., NASD is also responsible for investigations of and commencing compliance with federal securities laws and regulations, and for discipline proceedings against member firms and their associated member representatives. Fiero, 660 F.3d at 571-72.

¶ 33 "[A] person cannot lawfully engage in the securities business unless he or she is either registered with the NASD as a broker-dealer or as a person associated with a broker-dealer." Hollinger v. Titan Capital Corp., 914 F.2d 1564, 1573 (9th Cir.1990). As a condition of the right to engage in the securities business, broker-dealers and registered representatives must abide by NASD rules and regulations. As You Sow v. AIG Fin. Advisors, Inc., 584 F.Supp.2d 1034, 1048 (M.D.Tenn.2008); Sec. & Exch. Comm'n v. WACO Fin., Inc., 751 F.2d 831, 832 (6th Cir.1985) (broker-dealers "who belong to the NASD are required to abide by NASD Rules of Fair Practice and to meet other NASD requirements").

¶ 34 While NASD Rules do not create a private cause of action, courts have looked to the Rules to define the scope of a common law duty such as negligent supervision. Craighead v. E.F. Hutton & Co., 899 F.2d 485, 493 (6th Cir.1990) ("We agree with the district court that NYSE [(New York Stock Exchange)] Rule 405 does not imply a private right of action cognizable in federal court."); As You Sow, 584 F.Supp.2d at 1048-49 ("violations of NASD rules alone do not give rise to actionable claims," but NASD Rule 3040 and other NASD rules "assist Tennessee and other courts in defining the extent of a legal duty at common law"); McGraw v. Wachovia Sec., LLC, 756 F.Supp.2d 1053, 1075 (N.D.Iowa 2010) (recognizing duty based on NASD rules); Colbert & Winstead, PC 401(k) Plan v. AIG Fin. Advisors, Inc., No. 3:07-1117, 2008 WL 2704367, at *10 (M.D.Tenn. July 8, 2008) (court order) ("the NASD may define the scope of a duty of a broker dealer"): Cf. Miley v. Oppenheimer & Co., 637 F.2d 318, 333 (5th Cir.1981) (NYSE and NASD Rules are "excellent tools" to assess reasonableness of broker's conduct); Piper, Jaffray & Hopwood Inc. v. Ladin, 399 F.Supp. 292, 299 (S.D.Iowa 1975) (concluding NASD and NYSE rules are "admissible as evidence of negligence"); Mihara v. Dean Witter & Co., 619 F.2d 814, 824 (9th Cir.1980) (NASD and NYSE rules "reflect the standard to which all brokers are held").

¶ 35 The crux of the dispute in this case is the scope of AIG's duty to supervise Mark's outside business activity as an investment advisor directing transactions in the Wells Fargo brokerage accounts. The Garrison Trusts argue the supervisory requirements of NASD Rule 3040 apply. AIG contends only the supervisory requirements of NASD Rule 3050 apply and under the plain language of NASD Rule 3040, NASD Rule 3050 transactions are excluded.

¶ 36 As a general overarching rule, NASD Rule 3010, Supervision (amended effective Dec. 19, 2007), requires a brokerage firm to establish, implement, and maintain a system that includes written procedures to supervise the activities of each registered representative and other associated persons reasonably designed to achieve compliance with applicable securities laws, regulations, and NASD Rules.14

¶ 37 Former NASD Rule 3030, Outside Business Activities of an Associated Person (effective Oct. 13, 1988), prohibits a registered representative from participating in outside business activity unless the employer member receives "prompt written notice." Former NASD Rule 3030 states:

¶ 38 NASD Rule 3040, "Private Securities Transactions of an Associated Person," addresses private securities transactions of a registered securities representative for compensation. "Selling compensation" is broadly defined to include "any compensation paid directly or indirectly from whatever source in connection with or as a result of the purchase or sale of a security." NASD R. 3040(e)(2). NASD Rule 3040(a) states that "[n]o person associated with a member shall participate in any manner in a private securities transaction except in accordance with the requirements of this Rule." NASD Rule 3040(b) requires the registered securities representative to provide written notice to the employer member prior to engaging in any private security transactions. NASD Rule 3040 states, in pertinent part:

¶ 39 After receiving notice of a private securities transaction, the employer member must approve or disapprove the proposed participation in private securities transactions in writing. NASD R. 3040(c)(1). NASD Rule 3040(c) states, in pertinent part:

¶ 40 NASD Rule 3050, "Transactions for or by Associated Persons," also addresses outside business activities and expressly applies to "an account or order in which an associated person has a financial interest or with respect to which such person has discretionary authority." NASD R. 3050(e). Under NASD Rule 3050(c) and (d), prior to engaging in any transactions, a registered representative who opens an account or places an order for a securities transaction at another financial institution must notify the employer member in writing of the intent to open the account or place an order.

¶ 41 The other financial institution or executing member has an obligation to notify the employer member. NASD R. 3050(b). If the employer member approves engaging in transactions under NASD Rule 3050, upon written request from the employer member, the executing member must provide copies of confirmations, account statements, and other information regarding the account. NASD R. 3050(b)(2). NASD Rule 3050 states, in pertinent part:

¶ 42 The purpose of NASD Rule 3050 is to prevent "potential and actual conflicts of interest raised through registered representatives' personal trading activities." Dep't of Enforcement v. Ng, No. 2009019369302, at 10 (Fin. Indus. Regulatory Auth. Nat'l Adjudicatory Council Apr. 24, 2013).16 NASD Rule 3050 states, in pertinent part:

¶ 43 The Garrison Trusts concede that from 2006 to 2007, AIG complied with NASD Rule 3050. The concession is well taken. In compliance with NASD Rule 3050, Wells Fargo, as the executing member, expressly requested written approval from AIG to allow Mark to act as the "trustee, owner and manager" of the Garrison trusts and Garrison Family LLC for the brokerage accounts at Wells Fargo. In the November 14, 2006 letter of understanding from the AIG Compliance Department to Mark concerning the request, AIG does not object to Mark acting "solely as the trustee/owner/manager" on the condition that he is prohibited from acting in any other capacity and that he annually disclose the Wells Fargo activity in the AIG OBAQ. In a letter dated November 22, AIG also requested monthly account statements and trading confirmations from Wells Fargo for the brokerage accounts and specifically stated that the NASD regulations require the First Line Supervisor to monitor the Wells Fargo accounts.

¶ 44 The Garrison Trusts claim that when Mark hired Acumen in March 2007 to provide investment advice for a fee, AIG had a duty to supervise under NASD Rule 3040. The Garrison Trusts argue that only transactions "for which no associated person receives any selling compensation"17 are excluded from the requirements of NASD Rule 3040. AIG asserts that because the plain language of NASD Rule 3040 excludes all transactions subject to NASD Rule 3050, the requirements of NASD Rule 3040 do not apply.

¶ 45 Interpretation of statutes and regulations is a question of law this court reviews de novo. Skinner v. Civil Serv. Comm'n, 168 Wn.2d 845, 849, 232 P.3d 558 (2010). NASD Rule 3040 applies only to "private securities transactions." Rule 3040 defines "private securities transaction" as transactions outside "the regular course or scope of an associated person's employment" and excludes three discrete categories of transactions from the definition. "Private securities transaction" is defined as follows:

NASD R. 3040(e)(1).18

¶ 46 The definition of "private securities transaction" clearly excludes three distinct categories of transactions: (1) transactions subject to the requirements of NASD Rule 3050, (2) transactions among immediate family members under Rule 2790, and (3) personal transactions in investment company and variable annuity securities. NASD R. 3040(e)(1). The question is whether the phrase "for which no associated person receives any selling compensation" applies only to the immediately preceding phrase "transactions among immediate family members" or to both the preceding phrase that excludes NASD Rule 3050 transactions and the phrase that excludes immediate family member transactions. See NASD R. 3040(e)(1).

¶ 47 Under the "last antecedent rule" of statutory construction, a qualifying phrase refers to the last antecedent unless there is "`a comma before the qualifying phrase.'" Berrocal v. Fernandez, 155 Wn.2d 585, 593, 121 P.3d 82 (2005) (quoting In re Sehome Park Care Ctr., Inc., 127 Wn.2d 774, 781, 903 P.2d 443 (1995)). A comma before the qualifying phrase indicates that the phrase "`is intended to apply to all antecedents instead of only the immediately preceding one.'" Berrocal, 155 Wash.2d at 593, 121 P.3d 8219 (quoting Sehome Park, 127 Wash.2d at 782, 903 P.2d 443). Here, use of the comma before the qualifying phrase "for which no associated person receives any selling compensation" means the qualifying phrase applies to both preceding antecedents: "transactions subject to the notification requirements of Rule 3050" and "transactions among immediate family members ... for which no associated person receives selling compensation."20

¶ 48 The Garrison Trusts also cite NASD Notice to Members (NTM) 94-44, Board Approves Clarification on Applicability of Article III, Section 40 of Rules of Fair Practice to Investment Advisory Activities of Registered Representatives, and NASD NTM 96-33, NASD Clarifies Rules Governing RR/IAs [(Registered Representative/Investment Advisors) ], in support of the argument that AIG had a duty to supervise Mark's activities as an investment advisor receiving selling compensation and directing securities transactions in the Wells Fargo brokerage accounts.

¶ 49 A number of NTMs address the application of NASD Rule 3040 where an associated registered representative is also acting as a registered investment adviser. Courts may give substantial deference to NASD's interpretation of its own rules. Dawson v. N.Y. Life Ins. Co., 135 F.3d 1158, 1168 (7th Cir.1998); Ronay Family Ltd. P'ship v. Tweed, 216 Cal.App.4th 830, 842, 157 Cal.Rptr.3d 680 (2013); Siegel v. Sec. & Exch. Comm'n, 389 U.S.App. D.C. 94, 592 F.3d 147, 155 (2010); see also York Research Corp. v. Landgarten, 927 F.2d 119, 123 (2d Cir.1991).

¶ 50 In NASD NTM 91-32, Request for Comments on Compensation Arrangements for Activities of Registered Representatives Who Are Also Registered with the Securities and Exchange Commission as Investment Advisers. NASD states that NASD Rule 3040 "should apply to all investment advisory activities conducted by registered representatives other than their activities on behalf of the member that result in the purchase or sale of securities by the associated person's advisory clients." According to NASD NTM 91-32, "to conclude otherwise would permit registered persons to participate in securities transactions outside the scope of the oversight and supervision of the employer member and of a self-regulatory organization to the potential detriment of customers."

¶ 51 NASD NTM 94-44 states that "[i]n clarifying its previous position in Notice to Members 91-32. the Board [of Governors] focused primarily upon the RR/RIA's [(registered representative/registered investment advisor's) ] participation in the execution of the transaction — meaning participation that goes beyond a mere recommendation." NASD NTM 94-44 describes an example of where the transaction of a registered representative acting as a registered investment advisor would trigger the requirements of NASD Rule 3040:

¶ 52 NASD NTM 96-33 specifically reiterates that a dually licensed registered representative and investment advisor must provide prior written notice to the member before engaging in any investment advisory activity for a fee. NASD NTM 96-33 states, in pertinent part, "A member must receive prior written notice from an RR/IA requesting approval to conduct investment advisory activities for an asset-based or performance-based fee on behalf of each of his or her advisory clients." NASD NTM 96-33 states the prior written notice "must include details such as:"

¶ 53 NASD NTM 96-33 specifically directs a registered securities representative/investment advisor such as Mark to provide the employer member with "a subsequent written notice that details" the change in his role. NASD NTM 96-33 states, in pertinent part:

¶ 54 Here, the undisputed record shows that Mark did not comply with the requirement to obtain prior written approval before hiring Acumen in March 2007 to provide investment advice for the Wells Fargo brokerage accounts. Nor did Mark comply with the requirement to provide AIG with written notice that his role had changed from trustee and manager of the Garrison trusts and the Garrison Family LLC to investment advisor. The undisputed record also shows that Mark acted as an investment advisor receiving selling compensation and directed private securities transactions in the Wells Fargo brokerage accounts. The dispositive question is whether AIG knew or should have known that Mark's role had changed from trustee and manager of the Garrison trusts and Garrison Family LLC under NASD Rule 3050 to acting as an investment advisor directing transactions for a fee in the Wells Fargo brokerage accounts, thereby triggering compliance with NASD Rule 3040.

¶ 55 The Garrison Trusts rely on the two annual OBAQs Mark submitted to AIG for 2005 to 2006 and 2007 to show AIG had notice triggering the duty to supervise under NASD Rule 3040. The Garrison Trusts contend the difference between the two OBAQs provided notice to AIG that Mark was acting as an investment advisor and receiving selling compensation.

¶ 56 In the 2005 to 2006 OBAQ, Mark reported he was "Trustee/Owner/Manager" for the Wells Fargo accounts and stated he received "[u]nder $10,000" for this activity. The 2005 to 2006 OBAQ states, in pertinent part:

¶ 57 By contrast, in the 2007 OBAQ dated October 30, 2007, Mark reports not only that he is the "Trustee/Owner/Manager" on the accounts held at Wells Fargo but also that it is "an Investment related activity" conducted under his independent financial advice business Acumen.22 The October 30, 2007 OBAQ submitted by Mark states, in pertinent part:

¶ 58 Because the OBAQ submitted in October 2007 does not comply with the written notice requirements set forth in NASD Rule 3040(b) and NASD NTM 96-33, the 2007 OBAQ standing alone may not have provided AIG with notice that Mark's role had changed in March 2007 and that he was acting as the investment advisor for compensation rather than solely as the trustee and manager of the Garrison trusts and Garrison Family LLC brokerage accounts at Wells Fargo. However, when coupled with the directive from AIG and the "AIG Financial Advisors Sales Practice Manual," there is a genuine issue of material fact as to whether AIG knew or should have known that by October 2007, Mark was acting as an investment advisor for the Wells Fargo brokerage accounts and receiving selling compensation. The AIG manual states that "[o]n an annual basis, RRs are required to disclose to the Firm, via the OBAQ, any outside business activities prior to engaging in such activity."

¶ 59 The Garrison Trusts also assert that even if AIG did not have notice triggering the supervisory requirements of NASD Rule 3040, the monthly statements and trading confirmations AIG received under NASD Rule 3050 revealed suspicious circumstances or "red flags" triggering the duty to investigate or monitor the transactions in the Wells Fargo brokerage accounts. Under NASD Rule 3050, both Wells Fargo as the executing member and AIG as the employer member had an obligation to review the monthly account statements and securities transaction confirmation slips for the Wells Fargo brokerage accounts, not only for insider trading and conflicts of interest but also for unapproved outside business activities and suspicious circumstances.

¶ 60 In McGraw, the plaintiffs alleged the employer member Wachovia owed them a duty to supervise the outside activities of an associated stockbroker. McGraw, 756 F.Supp.2d at 1058-59. The court cites the general rule that absent notice, "`a broker-dealer owes no duty to a non-customer who has invested money through an independent investment advisor'" but notes "`this general proposition of non-liability is far from a per se rule.'" McGraw, 756 F.Supp.2d at 107224 (quoting Bear Stearns & Co. v. Buehler, 23 Fed.Appx. 773, 775 (9th Cir.2001)). The court describes the well-defined exception to the general rule as follows:

McGraw, 756 F.Supp.2d at 107225 (quoting Bear Stearns, 23 Fed.Appx. at 776). Accordingly, the court held:

McGraw, 756 F.Supp.2d at 1075.

¶ 61 Here, it is undisputed that AIG complied with the requirements of NASD Rule 3050 when it approved Mark acting as the trustee and manager of the Garrison trusts and Garrison Family LLC for the Wells Fargo brokerage accounts. Beginning in 2006, AIG received monthly account statements and confirmation slips from Wells Fargo for trading transactions in the brokerage accounts for the Garrison trusts and the Garrison Family LLC. In December 2007, AIG also approved personal brokerage accounts at TD Ameritrade for Mark and Michelle Garrison. From early 2008 to April 2009, AIG received confirmation slips and account statements for the personal brokerage accounts at TD Ameritrade.

¶ 62 An excerpt from the AIG Financial Advisors Sales Practice Manual describes the First Line Supervisor's responsibility for monitoring outside business activities and the annual OBAQ report. The manual appears to require the First Line Supervisor not only to review the OBAQ "for any potential conflict with the Firm's business" but also to "[q]uestion RR regarding potential unapproved outside business activities referenced in OBAQ/ACQ [(outside business activities questionnaire/annual compliance questionnaire) ] or other red flags or indications of misunderstanding of Firm or Regulatory policies."26

¶ 63 Viewing the evidence in the light most favorable to the Garrison Trusts, there are material issues of fact as to whether suspicious activity or red flags required AIG to investigate and monitor Mark's activity in the Wells Fargo accounts. For example, there are material issues of fact as to whether the information Mark submitted in the October 2007 OBAQ required the AIG First Line Supervisor to investigate potential unapproved outside business activity as an investment advisor for the Garrison trusts and the Garrison Family LLC. The Garrison Trusts also presented evidence that Mark changed the nature of the investments between January 2007 and November 2008, and that by November 2008, Mark had transferred more than $9.6 million from the Wells Fargo accounts to his personal brokerage TD Ameritrade accounts.

WSSA

¶ 64 The Garrison Trusts contend that as a matter of law, AIG is a "control person" under the WSSA, RCW 21.20.430(3). In the alternative, the Garrison Trusts contend material issues of fact preclude dismissal of the "control person" claim.

¶ 65 Under the WSSA, it is unlawful to engage in fraud or deceit in connection with the offer, sale, or purchase of any security. RCW 21.20.010. RCW 21.20.430(3) states that certain persons may be secondarily liable for a violation of the act:

¶ 66 In Hines v. Data Line Systems, Inc., 114 Wn.2d 127, 787 P.2d 8 (1990), our state Supreme Court established a two-prong test to establish whether a defendant is a "control person":

Hines, 114 Wash.2d at 136, 787 P.2d 827 (quoting Metge v. Baehler, 762 F.2d 621, 630-31 (8th Cir.1985)). The plaintiff does not need to show that the defendant "`culpably participated'" to establish control person liability. Hines, 114 Wash.2d at 137, 787 P.2d 8. Because there are material issues of fact as to whether AIG knew or should have known Mark was acting as an investment advisor rather than as only the trustee and manager, we conclude there are also genuine issues of material fact as to the extent to which AIG could exercise control over the transactions in the Wells Fargo accounts. See also Hollinger, 914 F.2d at 1574 ("The broker-dealer's ability to deny the representative access to the markets gives the broker-dealer effective control over the representative at the most basic level.").28

Respondeat Superior

¶ 67 The Garrison Trusts also contend the court erred by dismissing its claim that AIG was liable based on respondeat superior. We disagree.

¶ 68 Respondeat superior, or vicarious liability, imposes liability on an employer for the torts of an employee who is acting on the employer's behalf within the scope of employment. Niece, 131 Wash.2d at 48, 929 P.2d 420. Respondeat superior is analytically distinct and separate from a cause of action for negligent hiring, retention, and supervision. Niece, 131 Wash.2d at 48, 929 P.2d 420.

¶ 69 Here, it is undisputed that Mark's actions as a registered investment advisor were outside the scope of his employment with AIG. Nonetheless, the Garrison Trusts contend AIG is liable under a respondeat superior theory because as an AIG branch office manager, Mark was responsible for supervising his own outside business activities. But the undisputed record establishes an AIG First Line Supervisor was responsible for supervising and reviewing Mark's outside business activities as the trustee and manager of the Garrison trusts and the Garrison Family LLC, as well as the TD Ameritrade personal accounts. We conclude the court did not err by dismissing the respondeat superior claim.

¶ 70 In sum, we affirm summary judgment dismissal of the respondeat superior claim but reverse summary judgment dismissal of the claims against AIG for negligent supervision and violation of the WSSA, and remand for trial.29

WE CONCUR: SPEARMAN, C.J., and COX, J.