In March 2017, a customer alleged unauthorized trading and unsuitability. The customer is requesting $413,045 in this pending dispute.
In July 2015, a customer alleged breach of fiduciary duty, negligence, and breach of contract. The customer is requesting $21,125,000 in this pending dispute.
Advisors are not allowed to engage in unauthorized trading. Unauthorized trading occurs when a broker sells securities without the prior consent from the investor. All brokers, who do not have discretionary authority to trade an account, are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). Further, subsequent disclosure of the trades does not cure the violation. Unauthorized trading is a type of investment fraud because the SEC has found that no disclosure could be more important and material to an investor than to be made aware that trading is taking place. Unauthorized trading is often a gateway violation to other securities violations including churning, unsuitable investments, and excessive use of margin.