Unless the client of a brokerage firm has signed a contract that allows his or her broker to engage in discretionary trading, each transaction performed by the broker must be done with the client's permission. If no such contract exists than the brokerage must obtain the client's permission for every transaction.

Unfortunately some disreputable brokers who have had discretionary trading contracts with their clients may take advantage of their freedom and purchase "house stocks", or engage in other illicit trading practices designed to increase their earnings at the expense of their client. Some disreputable brokers left to their own devices, will engage in excessive stocks trading in order to increase their trade commission. This practice is called "churning" and is grounds for legal action.

If a client finds that he or she has been victimized by unauthorized trades, a securities lawyer should be contacted immediately. The failure to react immediately after receiving an order confirmation that reports undesired trades may be viewed in arbitration as unspoken consent. A client must not wait to see how the unauthorized trade fares before calling an attorney. If he or she does wait, the credibility of the case will be diminished.

Clients who feel that their broker has made trades with out their consent or against their expressed wishes should contact a lawyer.

If your broker has made unauthorized trades without your approval, you should consider seeking legal help as soon as possible. Contact us.


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