What Is Unauthorized Trading?
Stockbroker fraud comes in many forms, including unauthorized trading.
Make sure you are reviewing your account statements often and keeping
track of your portfolio to make sure this doesn't happen to you. If
you notice activity on your account statement that you did not know about
or consent to, then it is probably time to think about talking to an investment
Unauthorized trades happen when your stockbroker makes trades on your account
without your authorization. Your broker must obtain your permission before
buying or selling anything for your account. Keep in mind that you can
provide a "trading authorization" that allows your broker to
buy and sell securities in your account without having to contact you.
However, that does not mean your broker can misuse or exceed this authority.
Brokers who make
unsuitable or unauthorized trades may be held liable for any sustained financial losses.
What Should I Do If I Suspect Unauthorized Trading?
Unfortunately, unauthorized trades can be extremely difficult to prove
months or years down the road. A successful securities arbitration claim
could be difficult or impossible if you wait too long to act. If you think
your broker may have made transactions without your knowledge or consent,
start gathering copies of important documents, and do not wait another
day to speak with a respected and experienced investment fraud attorney.
The sooner you act, the better chance you have of a positive outcome during
If you discover that trades were made on your behalf without your permission,
you will need to do the following in order to successfully pursue a claim
to recover losses:
- You have to prove that the unauthorized transactions occurred.
- You need to show that you did not give permission. Any evidence that you
can provide that proves you didn’t authorize the transactions (ex:
you were out of town) would be helpful.
- You must show that you suffered a loss from the unauthorized trades.
According to the Financial Industry Regulatory Authority (FINRA) an example
of unauthorized trading would be a situation where your broker believed
that a transaction was in your best interest, but could not reach you
and made a trade without your permission. Even if your broker had good
intentions, unauthorized trading is not allowed. Brokers often earn commissions
on transactions that they make, so you need to pay careful attention to
the activity occurring in your account. You should also read through confirmations
that you receive in the mail to make sure there were no trades made without
What You Need to Know About Unauthorized Trading Claims
When it comes to unauthorized trading claims, you have to show the following:
- The unauthorized transactions took place
- You did not grant your broker prior permission to make these trades
- You suffered financial loss due to the unauthorized transactions
Unauthorized trading cases are generally handled in mandatory securities
arbitration before the Financial Industry Regulatory Authority (FINRA).
That means your case will most likely not be taken to court. As you consider
pursuing an unauthorized trading claim against your broker or brokerage
firm, you need to educate yourself on what to look for in an attorney.
You should be represented by a broker fraud lawyer who possesses the skills,
resources, and experience to properly handle your claim. Not every attorney
has these qualifications.
How Meyer Wilson Is Prepared to Help
Meyer Wilson is a nationally recognized firm that devotes its practice
solely to representing investors in claims against brokers and financial
advisors and pursues class action lawsuits. We have successfully handled
hundreds of cases throughout the nation. Our law firm has become one in
which other lawyers refer to when they have clients who have suffered
financial loss from investment fraud and stockbroker misconduct.
With more than 50 years of combined legal experience, and having successfully
represented over 800 individual and institutional investors, the securities
arbitration lawyers at Meyer Wilson have the expertise, experience, and
resources necessary to review, investigate and aggressively pursue your
unauthorized trading claim. We have won hundreds of millions of dollars
in losses for clients nationwide, including in cities such as Los Angeles,
Dallas, and Tampa. For assistance with your unauthorized trading claim,
call us for a free case evaluation.
To learn more about broker prior authorization, watch the video below.