Miami Beach Unauthorized Trading Lawyer / Attorney

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Experienced, Miami Beach, Florida-Based Unauthorized Trading Defense Lawyer

Unauthorized trading is a form of securities fraud that has become a serious concern among investors and financial market regulators. This form of trading malpractice violates company policies and often results in substantial economic losses for the company and its investors. 

With the Securities and Exchange Commission (SEC) cracking down on unauthorized trading, it is essential for brokers and brokerage firms to truly understand it to avoid being involved in such misconduct.

Richard Serafini is a securities fraud defense lawyer with unparalleled representation in complex unauthorized trading cases brought forward by the SEC. With decades of expertise and a strong track record, he’ll ensure personalized attention and effective defense strategies tailored to each client’s unique situation.

What Is Unauthorized Trading?

Unauthorized trading happens when a broker or brokerage firm purchases, sells, or exchanges stocks, securities, options, or other financial products without the express permission of the investor-client.

According to the Financial Industry Regulatory Authority (FINRA) Rule 408T, a broker must discuss all trades with an investor before he or she makes them. The only exception to this rule is when the customer’s account is a discretionary or margin account.

With a discretionary account, a broker may buy, sell, or exchange securities without obtaining the client’s approval for each trade. To allow this, a customer must first sign a discretionary disclosure agreement with his or her broker or brokerage firm as documentation of the written authorization. Nonetheless, a stockbroker must refrain from abusing this authority by making unsuitable and excessive transactions.

A margin account allows investors to borrow money from the firm to purchase securities. When the value of this account falls below the balance requirements, a brokerage firm may liquidate securities to cover the margin balance. Like a discretionary account, a client must sign a margin agreement, authorizing the investment firm to liquidate securities when there is no longer enough equity to support the loan. 

Common Unauthorized Trading Tactics Constituting Broker Misconduct

One way financial advisors engage in unauthorized trading is by noting the trades they made as unsolicited, making it appear that the transaction was the investor’s idea and not that of the broker. Sometimes, a broker will make trades and then attempt to get the client’s consent afterward.

In other cases, a stockbroker will agree to an investment strategy and then feel that he or she may place subsequent orders under a non-discretionary account without first obtaining prior approval for every trade. Unfortunately, if the client does not contest the unauthorized transaction immediately, some brokers will try to make it seem like the investor has ratified the trade. This often happens to investors who do not review their monthly account statements. 

It is important to note that even if a broker has good intentions for making a trade, he or she still cannot execute the order without the customer’s express permission or authorization. A broker may make recommendations, but the client must ultimately agree to those suggestions before any transaction occurs. When a broker assumes discretion and trades without the client’s confirmation, such actions may constitute unauthorized trading.

Three Components of Unauthorized Trading Lawsuits

Unauthorized trading claims against a broker or brokerage firm are usually brought in FINRA arbitration. For a case to be valid, a claimant must be able to show that:

  • An unauthorized transaction occurred in his or her account,
  • The broker was not given trading authorization to execute the transaction on the claimant’s behalf, and/or
  • The claimant suffered financial or bond losses due to the unauthorized trade.

Why You Need an Experienced Unauthorized Trading Attorney in Miami Beach, FL?

If you are the target of an SEC investigation for unauthorized trading or the victim of such practices, you must contact an unauthorized trading lawyer immediately.

Facing unauthorized trading allegations and charges poses various risks, including civil litigation, enforcement actions, and the potential for administrative and civil penalties. With such dire consequences, you need an experienced defense counsel on your side. 

As a victim of unauthorized trading, you must have someone able to prosecute a case to regain the funds lost through unauthorized trading.

The Serafini Law Office can provide you with the best representation possible. We will work tirelessly to ensure your rights and reputation are protected. 

Mr. Richard A. Serafini has been practicing law for 40 years and is well-equipped to handle your case. He has represented many financial advisors, brokers, and brokerage firms in securities fraud investigations as well as investors in FINRA arbitrations. He will evaluate your situation and formulate an effective strategy to help you achieve the best results in your case. 

Contact us at (754) 223-4718 for a free consultation.