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Unauthorized Trading

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 fraud lawyer.

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 FINRA arbitration.

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:

  1. You have to prove that the unauthorized transactions occurred.
  2. 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.
  3. 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 your authorization.

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:

Need More Information?

Investment misconduct can be complex and confusing. That’s why we’re here to help you. Visit our Common Questions page to find in depth answers directly from our attorneys. Get More Answers
Have You Been a Victim of Investment Fraud?

You trusted your financial advisor with your money, but now you're left wondering what went wrong. If you or a loved one suffered losses because of investment misconduct, Meyer Wilson can step in and fight to recover your losses. The team of investment fraud lawyers at the firm has been helping people like you since 1999 by winning judgments, settlements and verdicts worth hundreds of millions of dollars against brokerage firms, financial advisors and banks.

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