The Financial Industry Regulatory Authority (FINRA) fined and suspended broker Leonard Tanner (Tanner) concerning allegations between October 2010, and January 2014, Tanner executed discretionary transactions in approximately 90 accounts of customers under a verbal authorization but without prior written authorization from those customers or approval of his brokerage firm City Securities Corporation (City Securities).
Tanner became a broker with a FINRA firm in 1969. From July 1995 until October 2010, Tanner was associated with PNC Investments. Since October 2010, Tanner has been registered with City Securities.
FINRA alleged that Tanner exercised discretion in executing transactions in the accounts of approximately 90 customers. FINRA found that Tanner received prior verbal authorization from his customers for these transactions for their investment strategies but exercised discretion in executing those transactions. FINRA determined that Tanner did not obtain written authorization from his customers and that City Securities did not approve these accounts for discretionary trading.
Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases where brokerage firms fail to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.