What Is Unauthorized Trading?
Unauthorized trading is a form of broker misconduct that occurs when a broker or financial advisor executes transactions in your account without first obtaining your permission. It is a direct violation of the rules that govern the securities industry (including the Securities Exchange Act of 1934), and it can result in significant financial losses for investors who never approved a single trade. If that sounds like your situation, we can help.
Many of our clients come to us devastated to learn that their broker made trades without their express permission. This is a clear violation of securities industries rules, and you should seek justice at once.
Under FINRA Rule 2010, your broker is required to obtain your express consent before placing any trade in a non-discretionary account. A non-discretionary account is one where you retain control over every investment decision, meaning your broker cannot buy or sell anything without speaking to you first.
We understand how alarming it can be to open your account statements and find transactions you never authorized, and you deserve to know your rights.
There are only two situations where a broker or broker-dealer may act without your prior authorization. The first is a discretionary account, where you have granted written discretionary authority, sometimes formalized through a power of attorney, allowing the broker to trade on your behalf. The second is a margin call, which occurs when the value of a leveraged account drops below a required threshold and the firm liquidates positions to cover the shortfall.
Signs of Unauthorized Trading
Watch your trade confirmations and monthly account statements closely. If you find transactions you never approved, those records may be the first evidence of trading activity you never sanctioned. Some of the most common signs of unauthorized trading are:Why Choose Robert Wayne Pearce as Your Unauthorized Trading Lawyer?
We know you have many options when choosing an attorney for this type of case. At the Law Offices of Robert Wayne Pearce, P.A., we have over 45 years of securities fraud experience. If your broker has been trading in your account without permission, you can be confident we will fight tirelessly to recover your financial losses. The reasons investors choose to work with us include:
- 45+ Years of Experience: Robert Wayne Pearce has handled investment fraud and securities fraud cases for over four decades, giving our firm extensive experience in regards to how brokerage firms defend themselves.
- $185 Million Recovered: Our firm has recovered $185 million for clients harmed by unauthorized trading, securities fraud, and related violations across the country.
- 99%+ Success Rate: Mr. Pearce has recovered funds for over 99% of his clients through court litigation, FINRA arbitrations, and settlements nationwide and internationally.
- 200+ Cases Tried: Attorney Pearce has tried over 200 cases to trial verdict or arbitration award, with only 4 losses for clients in his career.
- No Fees Unless We Win: We represent clients on a contingency basis, meaning you pay nothing unless we recover for you.
Meet the Team
ROBERT WAYNE PEARCE
Securities Attorney
ADAM KARA LOPEZ
Securities AttorneyHow Can You Prove Unauthorized Trading?
Broker fraud and misconduct can be incredibly difficult to prove. You need an attorney experienced in FINRA arbitration to help obtain a favorable outcome.
Proving this type of claim requires showing that trades were executed in your account without your knowledge or express consent, and that you never granted the broker or financial advisor the authority to act unilaterally.
The most important evidence is the paper trail. Trade confirmations and monthly account statements establish the exact timing of every transaction in your customer's account, and comparing that timeline against your own records of authorization is how we build your case.
Brokerage firms and their defense attorneys often argue that receiving account statements constitutes implied authorization, claiming that you knew about the trades because they appeared on documents sent to you.
An experienced attorney can counter that argument by demonstrating the pattern of misconduct and establishing that no prior authorization was ever obtained.
FINRA BrokerCheck, the public database maintained by the Financial Industry Regulatory Authority, can also reveal whether your registered representative has a history of unauthorized trading claims, securities fraud violations, or disciplinary actions at prior broker-dealers. Acting quickly gives us the strongest possible position, because the longer you wait, the easier it becomes for brokerage firms to argue that your inaction amounted to ratification of the trades.
How Does FINRA Arbitration Work for Unauthorized Trading Claims?
Most claims against brokerage firms and financial advisors for this type of misconduct are resolved through FINRA arbitration rather than civil court.
FINRA arbitration is a formal dispute resolution process governed by FINRA's Code of Arbitration Procedure, designed specifically for securities industry disputes between investors and broker-dealers. It moves faster and costs less than federal litigation, and any award issued at the conclusion of the process is legally binding on all parties.
The process follows a defined series of steps:
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File a Statement of Claim:
Your attorney files a Statement of Claim with FINRA detailing the unauthorized transactions, the financial losses you suffered, and the legal basis for your claim. -
Service and panel assignment:
FINRA serves the claim on the brokerage firm and assigns an arbitration panel, typically composed of one or three arbitrators depending on the size of the claim. -
Discovery:
Both sides exchange documents, including account statements, trade confirmations, internal communications, and any records related to client authorization. -
The hearing:
A hearing is held where both parties present evidence, examine witnesses, and make arguments before the arbitration panel. -
The award:
The panel issues a binding award that can include recovery of financial losses, commissions, and in some cases additional damages. Brokers who exercise price discretion without proper authorization may face enhanced liability at this stage. - An unauthorized trading lawyer who knows the FINRA arbitration process can guide you through every step, protect your rights during discovery, and present the strongest possible case before the panel. Obtenga una consulta gratuita
Do not wait if your broker placed unauthorized transactions in your account. The Law Offices of Robert Wayne Pearce, P.A. serve investors in all 50 states and are ready to take on brokerage firms and their defense teams on your behalf. We work on contingency, so you owe us nothing unless we recover for you. Call today for a free consultation at (800) 732-2889 and let us fight to recover your financial losses.
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What is considered unauthorized trading?
Unauthorized trading occurs when a broker or financial advisor executes transactions in your account without obtaining your prior authorization, outside of a discretionary account agreement or a margin call.
Can I sue my broker for unauthorized trading?
Yes, you can pursue a claim against your broker and their brokerage firm through FINRA arbitration, which is the standard forum for resolving securities industry disputes.
How long do I have to file an unauthorized trading claim?
FINRA arbitration claims are generally subject to a six-year eligibility window from the date of the event, though applicable statutes of limitations may shorten that window depending on your state and the specific circumstances.
What damages can I recover from an unauthorized trading claim?
You may be entitled to recover your financial losses, commissions generated by the unauthorized transactions, and in some cases additional damages depending on the severity of the misconduct.