FINRA’s Department of Enforcement investigated Powell’s alleged misconduct and determined he exercised 159 discretionary trades in one of his customer’s accounts. A discretionary trade occurs when a broker decides when and which securities to purchase. According to FINRA, from February 2011 to June 2013, Powell exercised discretion in executing transactions in one of his customer’s account- the customer’s account was a non-discretionary fee-based account and Wells Fargo did not permit discretion in these types of accounts. Further, FINRA alleges Powell did not obtain written authorization from the aforementioned customer when he exercised discretion in the account.
Based upon the foregoing misconduct, FINRA alleges Powell 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, Powell 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 Powell through Wells Fargo, 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.