FINRA’s Department of Enforcement investigated Crooke’s alleged misconduct and found he exercised discretion in ten of his customers’ accounts. According to FINRA, Crooke discussed investment strategies, purchases and sales of products with his clients, and on future dates he exercised his discretion in executing those transactions. FINRA alleges Crooke exercised discretion in his customers’ accounts without written authorization, without designating the accounts as discretionary accounts, and without informing Merrill Lynch.
Based upon the foregoing misconduct, FINRA alleged Crooke 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, Crooke 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 suffered investment damages with Crooke through Merrill Lynch, 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.