Listen. Advise. Advocate.

Has your broker made unauthorized trades?

On Behalf of | Mar 11, 2022 | Financial Fraud |

When you hire a broker to manage your account, you entrust them with a great deal of power over your investments. However, your wishes and your goals should still be central to the transactions they make on your behalf. If they make trades without your approval, that can endanger your financial health. What should you know about unauthorized trading?

What is unauthorized trading?

When you work with financial professionals, they cannot make trades outside the scope that you authorize. Depending on your account, this can include trades that do not match your objectives or tolerance for risk, trades outside the agreed-upon time periods and methods and trades made without your approval.

Not only are unauthorized trades a violation of industry regulations, but they could also indicate other issues like churning.

What might indicate unauthorized trading?

Closely reviewing your portfolio and any transactions made by your broker can reveal a variety of warning signs for unauthorized trading. These include:

  • Transactions that you did not authorize — Any transactions or stock in your portfolio that you did not authorize or the unexpected sale of stock could be cause for concern.
  • High fees — If you face higher than expected fees, those costs could indicate that your broker made trades that you did not know about.
  • Trades that do not reflect your goals — Your trading portfolio should reflect your personal goals. If you prefer investments with lower risk, transactions involving stocks that involve higher risk can indicate that your broker has ignored your wishes in making trades.
  • Trying to convince you of the value of past transactions — If your broker made a trade without authorization, they may attempt to justify that transaction after the fact.

If you notice these signs of unauthorized trading or have other concerns, you can take steps to hold your broker accountable for their actions and protect your long-term financial health.