California Unauthorized Trading Attorneys
Broker-dealers and investment advisers who make trades in a client’s account without the client’s knowledge or prior authorization violate FINRA rules and the SEC’s Regulation Best Interest. In non-discretionary accounts, every trade requires the investor’s approval before execution. In discretionary accounts, the broker must trade within the scope of the authority granted and consistent with the investor’s stated objectives.
Careful review of trading patterns, order timestamps, and communication records can reveal unauthorized trades that benefited the broker rather than the investor. Where the evidence shows trades were placed without authorization, the broker and the firm can be held liable in FINRA arbitration or securities litigation.
Types of Unauthorized Trading
Unauthorized trading takes several forms: executing trades the investor never approved, exceeding the scope of limited discretionary authority, trading in products or strategies the investor specifically declined, and continuing to trade after the investor has revoked authorization. In each case, the investor may pursue a claim for the losses caused by the unauthorized activity.
FAQs
What should I do if I see trades on my account I did not authorize?
Document everything immediately. Save copies of your account statements showing the unauthorized trades, note the dates, and preserve any communications with your broker (emails, texts, call logs). Do not sign any documents the broker asks you to sign after the fact. Then contact a securities attorney to evaluate your claim. Prompt action matters because FINRA has a six-year eligibility rule for arbitration claims.
Can a broker trade my account without my permission if I have a discretionary account?
A discretionary account gives the broker authority to make trades without pre-approval for each transaction, but that authority is not unlimited. The broker must still trade within your stated investment objectives and risk tolerance. Trades that fall outside the scope of discretion, or that serve the broker’s interest rather than yours, are unauthorized even in a discretionary account.
Talk to a California Unauthorized Trading Lawyer
If your broker made trades in your account without your knowledge or consent, contact Rosenberger + Kawabata. Call (310) 894-6921 or submit an inquiry through our contact form.