If you maintain an investment portfolio, it is likely that you have a securities broker handling the trades made on your behalf. As a general matter, before making any trades for you, your broker must get your authorization before making each trade. If your broker makes a trade without obtaining your authorization, you may have a claim for unauthorized trading.
When Can an Investor Waive Authorization?
You can waive the per-trade authorization requirement by giving the broker written permission to buy and sell securities on your behalf, but this sort of discretionary trading still has its limits. Any transaction made on your behalf by a broker or brokerage firm must still fall within the realm of “suitable investments.” A suitable investment is one that is consistent with your investor profile, which includes stated tolerance and investment objectives, as well as your age, net worth, financial situation, and liquidity needs, among other factors.
When Can You Recover a Loss due to Unauthorized Broker Trading?
Potential losses can be recovered on your behalf for any of the following reasons:
- Failure to obtain written permission prior to trading on your behalf
- Unsuitable trades made on your behalf that are inconsistent with your investor profile
- Trades made outside the scope of the authority given.
In order to avoid waiving any claims that you may have, it is important that you act promptly if you suspect stockbroker misconduct.
Call a Los Angeles Investment Fraud Attorney Today
If a broker or brokerage firm made an unauthorized trade, or if they made an unsuitable investment in your account, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles investment fraud attorney for a consultation today.