Unauthorized trading is the purchase or sale of securities that a Financial Advisor or Stockbroker makes for a customer without the customer’s permission. The Financial Industry Regulatory Authority (FINRA) has a specific rule that prohibits any Financial Advisor or Stockbroker from making unauthorized securities trades without prior approval from the customer.
Although brokers make recommendations to their clients, the client must ultimately agree to those recommendations before a purchase or sale occurs. Unauthorized Trading is one of many ways a broker can harm his or her clients. Unauthorized Trading often results in greater commissions for the Stockbroker, which is self-serving and constitutes broker misconduct.
When an unauthorized purchase or sale has occurred, it is important to complain immediately. FINRA requires brokers to send their clients statements that document all transactions. These statements contain “confirmations,” documents reflecting purchases and sales. The best way, if not the only way, of knowing whether unauthorized trading is occurring, is to open one’s mail. Unfortunately, many investors do not open the envelopes or emails they receive from their brokers. Please open your mail and read all attachments to emails you receive from your broker/financial advisor!
If you or your client have been the victim of unauthorized trading, please call us at (800) 718-1422 for a complimentary consultation.