Broker misconduct in stock trades leads to FINRA suspension


In New York, throughout the United States and its territories like Puerto Rico, people place an immense amount of trust in their financial advisors and representatives. In many cases, these companies and their employees perform in an aboveboard fashion with the clients’ interests coming to the forefront.

Unfortunately, there are situations where these same companies and individuals who work for them commit legal violations that place a person’s finances in jeopardy or cause them to lose significant sums. Paying attention to cases in which there is broker misconduct is essential to protecting one’s interests.

Brokers suspended by FINRA for wrongdoing

The Financial Industry Regulatory Authority (FINRA) suspended two representatives of UBS Financial Services. The allegations against them included making trades that their clients did not agree to make. They were fined $5,000 each and were suspended for 45 days.

According to FINRA, one traded on behalf of 48 customers, and they did not know he was making the trades. The other did the same thing with 32 accounts.

Customers did not know, nor did they approve of the trades. The “financial advisors” conduct constitutes unauthorized trading and is a violation of FINRA rules and regulations. Unless a client authorizes the FA and broker-dealer in writing to exercise trading discretion over the clients’ account, no trades can be executed without the prior approval (with full disclosure of all material facts) of the client. Afterall it is the clients’ money not the money of the FA and broker dealer. As part of accepting their penalties, the two brokers did not admit wrongdoing, nor did they deny it.

Investors should be aware of broker wrongdoing

These incidents are examples of the illegal liberties that stockbrokers, financial advisors and others who are granted the responsibility to oversee and invest on behalf of clients all too often take. FINRA and other regulatory agencies are tasked with watching for misdeeds and penalizing those who commit them.

However, people are inherently vulnerable to this type of behavior and their financial future can be severely compromised because of it. Examples of misconduct may include:

  • Unauthorized trading, Ponzi schemes, selling away and other Stockbroker fraud
  • Encouraging people to move forward with unsuitable and risky investments
  • Taking advantage of the elderly
  • Not adhering to investor instructions
  • Failure to provide all facts or misrepresenting those facts

As the baby boomer generation continues to age elder clients are particularly vulnerable clients.