
Investors trust their brokers and financial advisors to guide them in making the right investment. When your broker’s actions caused you to suffer significant investment losses, you may be able to seek reimbursement in a FIRNA arbitration.
The experienced investment loss attorneys at S.A. Law Group can help you understand the full scope of legal remedies to address broker misconduct. Contact our office today for a free consultation.
Unauthorized trading is an act whereby a broker purchases or sells securities or other assets without the customer’s permission or authorization.
Fiduciaries and brokers need customers’ authorization before trading on their portfolios. The investment account type determines the means by which they obtain such permission.
A discretionary account authorizes your broker to trade without consulting you for every executed trading. The trading is, however, guided by the set of parameters you present to the broker.
A non-discretionary account requires your broker to consult you for individual transactions to seek your approval before proceeding.
This account type gives you more control over your account and may help prevent misconduct such as over-concentration.
Despite this, authorized trading remains one of the major misconduct arbitrated by FINRA annually. According to the Disputes and Resolution Statistics by FINRA, 149 cases of unauthorized trading were arbitrated in 2022.
Two notable cases of unauthorized discretionary trading arbitrated by FINRA in 2016:
Although a broker needs authorization from the customer before executing a trade, there are certain exceptions. The SEC permits brokerage firms to sell customers security without authorization if their account value is below the firm’s requirement.
If you notice an unauthorized trading in your account, contact your broker to seek clarification. If the broker’s explanation is unsatisfactory, reach out to the brokerage firm to report the issue.
While doing this, keep records of all correspondence. If the brokerage firm does not react satisfactorily, the SEC has an online complaint form to report such issues.
In addition to filing a complaint with the SEC, you may consider speaking with an experienced unauthorized trading lawyer to determine the best course of action.
Fill out the form or Call us at (202)444-4222