Unauthorized Trading Attorney
There are only limited circumstances where your financial advisor can be authorized to make trades in your account without your explicit permission. For this to be permitted, you must have granted the advisor written 鈥渄iscretion鈥 or 鈥渢rading authorization鈥 for your account. This written authorization is typically granted using a specific form prepared by the brokerage firm and signed by both the investor and the financial advisor.聽 When there is no such written authorization, it is improper and illegal for the stock broker to trade your account without receiving your permission for each and every trade. If you suspect misconduct, it’s best to consult with an unauthorized trading lawyer.
What is Unauthorized Trading?
The defines unauthorized trading as 鈥渢rades that a broker makes for a customer without the customer鈥檚 permission or authorization鈥 and notes that 鈥淸t]he major securities industry self-regulatory organizations have rules prohibiting unauthorized transactions.鈥 The Financial Industry Regulatory Authority (FINRA) defines unauthorized trading聽similarly as the 鈥渟ale or purchase of securities without the investor鈥檚 prior knowledge and authorization.鈥
Unfortunately, some brokers take it on themselves to 鈥渁ssume discretion鈥 over their clients鈥 accounts. When they act in this manner, brokers are violating FINRA rules and the law, and they can be liable for any losses that result. If your broker has made unauthorized trades to your account, contact AV短视频 to speak with a unauthorized trading lawyer.
In some cases, investors develop a relationship with their brokers where they simply assume that the broker is acting in their best interests and should be trusted to trade on the accounts without explicit discussion of each trade. The investor is lulled into thinking everything is going fine until, often suddenly, they are confronted with evidence that all is not well.
This is a particularly dangerous scenario, and as each stock broker fraud attorney at our firm can attest, it is all too common.
Our Attorneys Explain the Three Components of Unauthorized Trading Lawsuits
Unauthorized trade lawsuits are relatively straightforward. In order to win your case, your stock lawyers will need to show the following:
- An unauthorized transaction took place
- You did not approve the trade or transaction
- You suffered a financial loss from the unapproved trade.
Though this may seem fairly easy, the most challenging aspect is often providing enough evidence to demonstrate that you did not consent to the transaction.
Hire an Experienced Unauthorized Trading Attorney for Your Case
The best course of action to avoid this hazardous situation is for every investor to keep the relationship with his or her financial advisor a business relationship. This is not to say that the relationship cannot be friendly –聽 it simply means that professionalism should be the watchword. In a proper broker-investor business relationship, each and every transaction that is entered into should be discussed specifically: No trade should go unmentioned, no matter how well-established or pleasant the relationship may be.
FINRA has provided written guidance regarding best practices and how to avoid common investor problems, including being victimized by unauthorized trading. In its discussion of unauthorized trading, FINRA鈥檚 guidance explains: 鈥渢he broker may believe a transaction is in the investor鈥檚 best interest but cannot or does not contact the investor, and then makes the trade anyway. Or, the broker attempts to convince the investor of the benefits to the transactions in the hopes that the investor ratifies trades after the fact.鈥 FINRA聽cautions investors to 鈥淸r]emember, brokers generate commissions through executing transactions (sales or purchases). That is why you should pay close attention to activity in your account.鈥
Investors should timely and carefully review their monthly account statements to be sure that their brokers are not engaged in unauthorized trading. If unauthorized trading has occurred, it is very important to聽investigate it and register a complaint quickly, so that the firm cannot argue that you accepted or 鈥渞atified鈥 the trading through your silence.
If you suspect that your broker is trading your account without your permission, contact an experienced unauthorized trading attorney at AV短视频 today.聽 Our stock law firm offers free, initial consultations and we respond to all inquiries within 24 hours.