FINRA’s Department of Enforcement investigated Conley alleged misconduct and determined he exercised 21 discretionary trades in his customers’ accounts. A discretionary trade occurs when a broker decides when and which securities to purchase. According to FINRA, on May 14, 2013, Conley placed a single block order for discretionary options trades in the aforementioned customers’ accounts. FINRA alleges Conley did not obtain written authorization from the customers when he exercised discretion in their accounts.
Based upon the foregoing misconduct, FINRA alleges Conley 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, Conley 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 Conley through UBS, 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.