FINRA’s Department of Enforcement investigated Tanner’s alleged misconduct and determined he exercised discretion in executing transactions in the accounts of approximately 90 customers without receiving prior written authorization. According to FINRA, from October 2010 to January 2014, Tanner received prior verbal authorization from his customers for purchases and sales of products consistent with their investment strategies, but exercised his discretion in executing those transactions on future dates. Further, Tanner executed these trades without City Securities designating the clients’ accounts as discretionary accounts.
Based upon the foregoing misconduct, FINRA alleges Tanner violated NASD Rules 2510(b) and 2010. NASD Rule 2510 prohibits a registered representative from exercising any discretionary authority in a customer’s account unless such customer has provided prior written authorization and the account has been accepted by a FINRA member. Thus, a financial advisor must receive a client’s written authorization prior to executing trades in a customer’s non-discretionary account. When a financial advisor executes unauthorized trades, the financial advisor and brokerage firm may be found liable, as well as disciplined by securities regulators. Here, Tanner executed unauthorized and discretionary trades in non-discretionary accounts thereby violating NASD Rule 2510(b).
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you lost money investing with Tanner through City Securities, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation.