Unauthorized Trading

What is unauthorized trading?
Unauthorized trading occurs when a broker who does not have discretionary trading authority over an account undertakes a trade without obtaining the client’s prior approval. Unauthorized trading is often a means to another end, such as churning or misappropriation of assets.
Is my broker responsible for losses resulting from UT?
It is a violation of securities regulations for a broker to engage in discretionary trading in a customer’s account unless the broker has obtained written permission to do so from both the customer and the broker’s firm. See FINRA Rule 2510(b) (“[n]o member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member.”).
In the absence of discretionary trading authority, a broker’s discretion is strictly limited to “discretion as to the price at which or the time when an order given by a customer for the purchase or sale of a definite amount of a specified security shall be executed, except that the authority to exercise time and price discretion will be considered to be in effect only until the end of the business day on which the customer granted such discretion.” FINRA Rule 2510(d)(1).
Can I consult with a lawyer about UT?
If you have suffered losses as a result of unauthorized trades, you should contact an experienced securities law attorney immediately. We have attorneys who specialize in these types of cases. If you would like to set up a free consultation, call investor-claims attorney Daniel J. Broxup toll-free at (1-888) 607-4819.