Do Brokers Need Authorization to Make Changes?

In most instances, your stockbroker is required to obtain your permission before making a purchase or sale in your investment account. When your broker doesn’t get your prior authorization and goes ahead and makes the transaction anyways, you may have a claim for unauthorized trading. Even if your broker had good intentions and believed a particular transaction was in your best interest, he or she cannot execute the transaction without reaching you or getting your express approval before making the trade.

If you think your broker may have made transactions without your prior knowledge or consent start gathering copies of important documents and do not wait to speak with a respected and experienced investment fraud attorney. The sooner you act the better chance you have of a positive outcome during the mandatory FINRA arbitration.

If you discover the trades remain on your behalf without your permission you will need to prove that the unauthorized transactions occurred, that you did not give permission for the trade, and that you suffered loss from the unauthorized trade. Keep in mind that customers can provide a written and signed trading authorization in advanced that allows the broker to buy and sell securities in the account in the broker’s discretion and without having to contact the customer every time they do so. However, even if you gave your broker written discretion to trade in your account, the authority cannot be misused by making unsuitable or inappropriate trades. This type of broker misconduct can lead to financial loss and your broker may be liable.

You can get more information on unauthorized trading and what you should do if you suspect your broker in engaging in misconduct by using our website. Call us any time at (888) 390-6491 for a free case evaluation.