At the securities fraud law firm of Fitapelli Kurta, we are dedicated to recovering the investment losses of our clients. These sometimes result from broker fraud and negligence, including the practice of unauthorized trading. The attorneys at Fitapelli Kurta began their legal careers representing investment professionals and organizations, but we are now dedicated to representing investors. Knowing how investment firms operate has given our legal team of securities lawyers an edge when seeking monetary recovery for clients. We fight aggressively to protect investors against deceptive practices by the investment industry.Unauthorized Trading by Brokers
One of the paramount rules for brokers and financial advisers is to always obtain a client’s authorization before buying or selling a stock. If an investment professional fails to do this, it is known as “unauthorized trading.”
There are only a few specific exceptions to this rule that relate to accounts such as discretionary accounts, managed accounts, and margin accounts. Even then, an investor must sign documentation that allows the broker to make trades without the client’s consent. These requirements stem from a more general rule set forth by the Financial Industry Regulatory Authority (FINRA), a securities industry regulatory organization. FINRA directs its members to uphold high standards of ethics when conducting business. The failure of some brokers to comply with those standards has resulted in huge losses for investors.
Unauthorized trading can take place at many different levels. Individual investors may see unauthorized transactions in their account, or large investment firms may experience unauthorized trading carried out by employees. Either way, the investor ultimately suffers a loss when this type of deceptive practice occurs.
Brokers or other traders may conduct transactions that go beyond their employers’ exposure or risk limits, conceal transactions with fabricated records, or trade a different security than the type that had been authorized. Another activity that constitutes unauthorized trading is creating records of transactions that never took place. If an investment firm does not have clear reporting and accountability procedures, the practice of unauthorized trading may often go unnoticed until losses reach considerable amounts.
When determining whether unauthorized trading has occurred, an arbitrator or other regulatory body will examine whether an investor knew about or consented to trades, whether the broker had control over the account, and what actual transactions occurred. The key factor in these types of cases is the lack of authorization for investment transactions. If the evidence is sufficient to show unauthorized trading, an investor can seek to recover monetary damages.
If you or someone you know has reason to believe that a broker engaged in unauthorized trading, contact qualified legal representation without delay. Federal laws do not provide a statute of limitations, or timeframe for bringing this type of lawsuit, so it is imperative to understand the state laws that may limit your claims.Consult a Stock Fraud Lawyer for Your Claim
Unauthorized trading can result in serious losses. If you suspect your broker has conducted transactions to which you did not consent, you may have a claim. Whether you are based in New York or anywhere in the United States, the stock fraud attorneys at Fitapelli Kurta can evaluate your case and help guide you through the process to pursue your lost investments. Call (877) 238-4175 or contact us online to speak to a lawyer today.