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 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, FINRA’s Department of Enforcement investigated O’Brien’s alleged misconduct and determined he transacted approximately 171 unauthorized trades in two of his client’s accounts. According to FINRA, O’Brien periodically discussed trading strategies with the two customers; however, the customers did not provide O’Brien with authorization to execute trades in their accounts. Further, O’Brien executed these trades without obtaining written authorization from his customers or having Feltl designate the account as a discretionary account.
Based upon the foregoing misconduct, FINRA alleges O’Brien violated NASD Rules 2510(b) and 2010. Specifically, O’Brien unauthorized and discretionary trades in non-discretionary accounts violated FINRA Rule 2010, which requires members to “observe high standards of commercial honor and just and equitable principles of trade.”
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 O’Brien, 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.