NEW YORK-BASED UNAUTHORIZED TRADING ATTORNEYS

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There are several things that brokers and financial advisors are prohibited from doing while acting in a professional capacity, including making unauthorized trades. Unauthorized trading is barred by federal rules and regulations, and may constitute fraud.
If you believe that your broker or financial advisor engaged in unauthorized trading to your detriment, it is vital to meet with an experienced securities litigation attorney to discuss whether you can recover damages. Our securities lawyers at Weltz Law can assess your accounts to help you determine if you have adequate evidence of unauthorized trading to pursue a claim against your broker or financial advisor.

Weltz Law proudly assists investors who have suffered losses due to unauthorized trading in their pursuit of damages. We have more than 50 years of combined experience in arbitration hearings and litigation in state and federal courts, ad we take on cases in New York and throughout the country.

Call (877) 905-7671 today to request a free case consultation to discuss your concerns with one of our legal professionals at Weltz Law.

FINRA Rules Regarding Trades

The Financial Industry Regulatory Authority (FINRA) is an independent agency that sets forth rules that are imposed on brokers and brokerage firms. FINRA Rule 3260 prohibits a broker from exercising discretionary power over an investor’s account unless the investor has given the broker written authorization to do so. Absent written authorization to make discretionary trades, a broker must discuss any trades with their client and obtain the client’s consent prior to conducting any trades. Rule 3260 also requires brokerage firms to approve any discretionary accounts and review an account at regular intervals to ensure that the transactions are not excessive.

FINRA Rule 4512 requires brokers to keep a record of anyone who has discretionary authority over an account to avoid unauthorized trading. Furthermore, FINRA Rule 2020 and Securities Exchange Commission (SEC) Rule 10b-5 bar brokers from conducting any transactions by fraudulent, deceptive, or manipulative means. Unauthorized trading is considered a violation of these rules, due to its fraudulent nature.

Is Trading Without Consent Ever Permitted?

The rules regarding securities transactions require brokers to obtain a client’s authorization prior to making a trade in a non-discretionary account. A failure to obtain consent before making a trade constitutes unauthorized trading. In addition to discretionary accounts, there are some exceptions to the rule that consent is required for each transaction, such as margin accounts and managed accounts. In these types of accounts, the investor must still provide the broker with written authorization to make trades without their consent.

Proving That Unauthorized Trading Occurred

To determine whether a broker engaged in unauthorized trading, the arbitrator or court evaluating the case will assess whether an investor had knowledge of a trade and consented to the trade, whether the broker controlled the account, and which transactions occurred.

If the evidence establishes that trades were made without an investor’s consent, the investor can pursue damages, including the actual losses caused by the prohibited trading and any market gains from which the investor would have benefited if not for the trade.

Investors harmed by unauthorized trading might also be able to pursue a negligent supervision claim against the brokerage firm that employed the broker, as well as fraud, negligence, and misrepresentation claims against the broker. If your broker conducted trades without your consent, you should speak with a skilled securities litigation attorney at our firm regarding the facts of your case so we can determine your options for seeking damages.

Explore Your Options With Our Dedicated Legal Professionals Today

Brokers are not permitted to make trades without authorization. If they do, they can be held liable for any harm caused by the unauthorized trading. If you suffered losses because your broker traded without your consent, then you should meet with us to discuss if you are entitled to monetary compensation.