Unauthorized Transactions or Trading

Alabama, Georgia, Florida

Permission to Trade
In order for a broker to trade your securities, he or she must have your permission. This discretionary trading authority can be given verbally or in writing, but it must be done before your broker begins handling your investments.

Margin accounts are the exception to this rule. These accounts are when you borrow money from your broker to buy a stock and use your investment as collateral. Investors often use margin to increase their purchasing power so that they can own more stock without entirely paying for it. With margin accounts, a broker is allowed to sell securities without first consulting you.

Investments for Your Portfolio
Prior to any buying or selling, your investment portfolio should be established. Your broker does this by assessing your financial goals, desired risk level and tax needs. Your portfolio gives the grounds on which your broker will make trades.

Unauthorized trading happens when your broker engages in buying and selling that does not fit the needs outlined in your portfolio. A common strategy that deceitful brokers use is to buy securities for your account and when you call them to complain, they tell you the securities have increased in value, and you should keep them. Another tactic is to blame the unauthorized trade on a "computer or administrative error." Be aware of this excuse, because it could indicate a dishonest broker.

Investors Speaking Out
In the United States, securities fraud is on the rise. In 2001, about 7,000 securities-related arbitrations were filed with the National Association of Securities Dealers (NASD)-a 24 percent increase from the year 2000. More and more investors are speaking out; hiring lawyers and recovering their losses. NASD plaintiff awards through September of 2001 exceeded $75 million (not including those complaints settled outside arbitration).

If you or a loved has incurred losses, and you believe it is the result of unauthorized trading, contact the investment advisor attorneys at Burke, Harvey & Frankowski. Serving Florida, Georgia and Alabama, our securities fraud lawyers are committed to your case and can help you reclaim the money you deserve. Call or e-mail us today for a free consultation.

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