The Financial Industry Regulatory Authority (FINRA) sanctioned broker George Zaki (Zaki) concerning allegations that between June 2010, and August 2012, Zaki implemented and/or executed approximately 3,600 discretionary trades in the accounts of approximately 80 Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) customers without the customers’ prior written authorization.
Zaki entered the securities industry in October 2007 joining Neuberger Berman LLC. In June 2010, Zaki became registered with Merrill Lynch. Zaki remained registered with Merrill Lynch until he was terminated on October 8, 2012 when Merrill Lynch filed a Form U-5 stating that Zaki was terminated for “conduct involving exercising discretion in non-discretionary client accounts.” In November 2012, Zaki became registered with Barclays Capital Inc. until March 2014. Thereafter, Zaki became registered with Janney Montgomery Scott LLC where he is presently employed.
Under the FINRA rules, unauthorized discretionary trading is not allowed. NASD Rule 2510(b) provides that registered representative may exercise discretionary power in a customer’s account unless such customer has given prior written authorization and the account has been accepted by the firm. FINRA has stated that subsequent ratification of the transaction by the customer does not excuse this violation. In addition, FINRA Rule 2010 requires members and associated persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
According to FINRA, many of Zaki’s Merrill Lynch customers opened accounts on the Merrill Lynch Personal Advisor (MLPA) platform that did not allow registered representatives to enter trades on a discretionary basis. FINRA alleged that Zaki processed trades for the approximately 80 customers on the MLPA platform where he was not permitted by the firm to exercise discretion in these accounts. FINRA found that while Zaki’s customers had previously provided verbal authority to place trades in their accounts, Zaki did not have written discretionary trading authority from his clients. During the period examined, FINRA found that Zaki participated in effecting approximately 3,600 trades in the accounts of approximately 80 firm customers without the customers being contacted prior to the trades.
If you believe that you were the victim of unauthorized trading, the attorneys at Gana LLP can help you proceed against the brokerage firm and recover investment losses.