You should also file a complaint if the trades were transacted in a nondiscretionary account, where the broker did not have such permission. Another path where the broker may be authorized to sell an investor’s stock shares is if the investor sold put options against the stock positions. A seller of put options is required to deliver the shares if the option contract is exercised by the option buyer.
Margin Call
Furthermore, Robinhood is a securities brokerage and as such, securities brokerages are regulated by the Securities and Exchange Commission (SEC). A brokerage is not allowed to buy stocks on your behalf without your written or oral consent. This is a rule by SEBI & the exchanges are authorized to monitor that it is being diligently followed by brokerages.
FINRA Arbitration Attorney Handling Unauthorized Trades Claims for Investors
These include, at a minimum, out-of-pocket losses caused by the broker’s prohibited trading. If the transactions resulted in losses during an upward-trending market, the investor may also seek market gains he or she would have otherwise experienced. At Meyer Wilson, we have a long history of helping victims of investment misconduct who have lost money because brokers sold and bought stocks and other securities without first obtaining permission. Reach out to an experienced unauthorized trading lawyer at our firm to schedule a free consultation with a member of our legal team today. Discovering that your broker sold stocks without your permission can be overwhelming. If you find yourself in this situation, it’s advisable to consult a stockbroker fraud lawyer promptly.
I have had the pleasure of working with Robert for over five years now, and every interaction with him reminds me that he is smart, quick, responsive and a consummate professional. He possesses an impressive memory and excellent attention to detail, and his thoroughness is a virtue that my colleagues and I have learned to appreciate greatly in every case of his that we assist with. As a final positive reflection of Robert, his staff is highly skilled and always welcoming.I would most certainly recommend his services to family and friends without hesitation.
The Securities and Exchange Commission indicates that churning is both unethical and illegal. Churning violates SEC Rule 15c1-7, and is also prohibited by New York Stock Exchange Rule 408(a)-(c) as well as FINRA Rule (b)(4)(iii). In my many years of experience, Bob is as good or better than anyone I have ever worked with and always gives every case his maximum best effort. In arbitration, when the pressure is on, Bob is always calm and prepared to and consistently crafts a winning strategy.
We have deep experience handling claims involving unauthorized transactions. If you sustained substantial losses because your broker sold your stocks without your permission, we can help. Your broker cannot sell your securities without getting permission from you. A financial advisor needs the proper authorization to execute any transaction on your brokerage account. Whether it is buying a stock, selling securities, or moving money around, unauthorized trading is a very serious legal violation.
When Brokers Can Trade on Behalf of Clients
On January 29, 2025, the Securities and Exchange Commission (“SEC”) filed an enforcement… Specializes in representing investors who have suffered losses as a result of investment fraud. We offer free, no-obligation consultations so you can learn more about your legal rights and options.
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A put option exercise can come at any time, and the broker will sell the shares to the option buyer at the price specified by the option contract. The majority of investment contracts contain a clause stating that any disputes that may arise will need to be resolved through arbitration. For investors, pursuing compensation through arbitration offers a much quicker option for recovering damages than would be possible if they took their case to trial.
If you are unsure whether or not you have a discretionary account, you learn about the difference between a non-discretionary and discretionary account here. You looked into your investment account and discovered that a number of your shares had been sold without your permission. You didn’t give the go-ahead, so you’re understandably confused, frustrated, and angry. As long as the activity fits your investment goals and risk profile, and doesn’t involve illegal or unethical activities such as churning (overtrading for the purpose of generating excess commissions), it’s legal. A broker will only sell enough securities to satisfy the margin call, but may be forced to sell again if losses continue to mount.
As a final word of caution, investors should note that filing a claim is not the same as filing a complaint. As described above, the former initiates the dispute resolution process (and critically, opens the door to potential compensation), whereas the latter simply involves submitting a complaint form online. Even if the complaint results in disciplinary action, fines, or other sanctions against the advisor, it may not result in recovery of compensation. Depending on the circumstances of the case, investors whose brokers or advisers have engaged in unauthorized trading can pursue an arbitration claim or a lawsuit filed in court.
Most of the time, clients sue financial advisors for what they consider fraud. Although they can seek a civil trial in an attempt to collect monetary damages, if fraud is a factor, criminal charges are typically sought. For example, a long position in a stock held in a margin account may be closed out by a brokerage firm if the stock declines steeply, and the investor is unable to put in the additional margin required. Brokers frequently make unauthorized trades as part of an account churning scams.
Fidelity Fined $600K for Employee Stock Plan Account Theft
His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Investor complaints filed against Toledo, Ohio financial advisor Rita Mansour have raised concerns about potential financial advisor misconduct surrounding Mansour…. The recent downturn in the U.S. stock market—among the sharpest declines in the last five years—has sent shockwaves through investors’… I have worked with Robert Pearce on dozens of matters and have always been impressed by his creativity, energy and professionalism. Bob is one of the few very best lawyers I have worked with during my 30 year career. The reason you can’t sell stock at a higher price than the current market value is because there are no buyer willing to buy it.
Can a brokerage legally restrict trading?
- Furthermore, FINRA Rule 4512 imposes on brokers several record-keeping requirements, one of which is to keep a list of people who have authority to make discretionary trades for the account.
- Meanwhile, FINRA proceedings offer a level of privacy to brokers and brokerage firms that may wish to avoid shining the light on their illegal activity.
- The second scenario in which a broker can sell stocks without your permission occurs when they are making a margin call.
- The cornerstone of investor trust lies in the assurance that brokers cannot sell stocks without explicit permission.
- In arbitration, when the pressure is on, Bob is always calm and prepared to and consistently crafts a winning strategy.
It is possible that the broker and the firm were unaware of the details and will deal with it accordingly, once it’s brought to their attention. However, the NYSE may still investigate violations of its own Rules and other matters within its jurisdiction. If the NYSE brings a formal case against a person or company, it brings that case in an administrative proceeding instead of a lawsuit in court. Unauthorized trading cases are complicated and you need to get legal advice to help you respond to accusations being made against you.
- Our law firm is investigating financial advisors and brokers who invested their clients’ money in Broadstreet Global Fund, LLC, and we may be able to help you recover your losses.
- In this comprehensive guide, we’ll delve into the circumstances surrounding this issue and provide clarity on the legal avenues available to you.
- A New York securities fraud lawyer at Bukh Law Firm, PLLC can provide assistance in responding to accusations of trading without permission.
- The SEC claims that Wakefield falsely reported these commissions on the firm’s official books.
- Instead, the account owner will have signed documents giving the broker the discretion to buy and sell securities for your portfolio based on an investment policy statement (IPS) to which the owner has agreed.
The price is determined by a combination of a few things, supply and demand and the price people are willing to pay for and what price sellers are willing to receive. There is no automatic right for the majority shareholders to force a sale by a minority shareholder. Conversely, there is no automatic right for a minority shareholder to force the majority to buy their shareholding. A forced sale is a legal process (often called a partition lawsuit) by which the co-owner of a property can accomplished broker sold stock without permission a court-ordered sale of the jointly owned property.