FINRA’s Department of Enforcement investigated Richard’s alleged misconduct and found he exercised discretion in one of his customer’s accounts from January 2011 to December 2012. According to FINRA, Richards received verbal authorization and approval from his customer for purchases and sales of products, but exercised his discretion in executing those transactions on future dates.
Based upon the foregoing misconduct, FINRA alleged Richards 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, Richards executed 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 suffered investment damages with Richards through First Midwest, 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.