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Unauthorized Trading

Before making a trade to buy or sell for a client, a broker must obtain the express permission of that client to make the trade, on the day the transaction occurs.  If not, the transaction is unauthorized.

NYSE Rule 408(a) and FINRA Rules 2510(b) and 2020 explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading violates just and equitable principles of trade and constitutes violations of Rule 10b and 10b-5 due to its fraudulent nature.

There are certain exceptions.  For instance, if a customer has a margin account and the value of the account falls below the brokerage firm’s requirements, the broker may be able to sell the customer’s securities without consulting the customer beforehand.

To help us evaluate whether you can seek recovery for "unauthorized trading" we offer a free and confidential claim evaluation, just click here to contact us, or call our office at any time at (800) 637-3243.