FINRA’s Department of Enforcement investigated Vaughn’s alleged misconduct and determined he transacted approximately 20 unauthorized trades in three of his client’s accounts. According to FINRA, the aforementioned three customers did not provide Vaughn with authorization to execute trades in their accounts. Further, Vaughn executed these trades without obtaining written authorization from his customers or having Edward Jones designate the account as a discretionary account.
Based upon the foregoing misconduct, FINRA alleges Vaughn 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 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, Vaughn 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 Vaughn through Edward Jones, 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.