FINRA’s Department of Enforcement investigated Prater’s alleged misconduct and found he exercised discretion and unauthorized trades on behalf of many of his customers. Specifically, between June and December 2013, Prater executed 13 unauthorized trades in the accounts of two customers, and executed 36 discretionary trades in the accounts of 18 Edward Jones’ customers. FINRA alleged Prater exercised discretion in the customers’ accounts without written authorization, without designating the accounts as discretionary accounts, and without disclosing the nature of the relationship to Edward Jones.
Based upon the foregoing misconduct, FINRA alleged Prater violated NASD Rule 2510(b) and FINRA Rule 2010. For example, 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. In cases where a financial advisor executes unauthorized trades without proper authorization, the financial advisor and brokerage firm may be found liable, as well as disciplined by securities regulators such as the case here.
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 suffered investment damages with Prater through Edward Jones, you may be able to recover your losses through FINRA arbitration. Please contact us for a free, no-commitment initial consultation or contact one of our attorneys at (800) 627-2179 to schedule a free consultation or complete our free case evaluator.