You open a statement and there they are. Positions you never discussed, sales you never approved, activity that has no connection to any conversation you remember having. The industry name for this is unauthorized trading, and I want to say plainly what it is, because brokers explain it away so smoothly that investors doubt themselves. Unless you granted written discretionary authority over your account, your broker needs your permission before every single trade. Not your habit of agreeing. Not your general trust. Your permission, for that trade.
I investigated this conduct from the government side for over a decade at the SEC's Miami Regional Office. It violates FINRA Rule 3260, it can violate the antifraud provisions including Rule 10b-5, and it is one of the clearest claims an investor can bring, because the proof is a comparison between the trades that happened and the authorizations that did not.
What kind of account do you have? Most retail investors have a non-discretionary account, which means the broker must obtain your approval before each transaction. A discretionary account, where the broker may trade without asking first, exists only if you signed a written authorization and the firm approved it, and even then every trade must fit your objectives. There is a narrow exception for margin accounts, where a firm may liquidate positions to meet a margin call without asking. If you never signed discretionary paperwork, every trade you did not approve is a rule violation, full stop.
Trades you do not recognize. The obvious one, and still the one investors most often talk themselves out of. If you cannot connect a transaction to a conversation, that is not a memory problem. Write down the trade, the date, and what you do and do not remember discussing.
A pace of trading that has no relationship to your plan. Sudden bursts of activity, positions opened and closed quickly, and commissions accumulating on the statement are how unauthorized trading and churning travel together.
Explanations that do not explain. "I had to move fast," "we discussed this months ago," "it's a housekeeping trade." A legitimate answer to "why is this trade in my account" names the conversation where you approved it. Anything else is a deflection.
Your risk profile drifting without your consent. A conservative account that gradually fills with speculative positions is being rebuilt around someone else's incentives, one unapproved trade at a time.
Preserve the record first. Download statements and trade confirmations going back at least a year or two, and save every email, text, and note of every call with the broker. Then find your account paperwork and confirm what you actually signed, because the firm's first defense is usually a claim of discretion or consent, and your agreement is the document that answers it.
Next, build the comparison. List each trade you did not authorize, with dates and amounts. This one exercise converts a feeling that something is wrong into the skeleton of a claim.
Then get legal advice before you confront anyone or sign anything. A written complaint to the firm has its place, and done right it creates a valuable record, including a request that the firm preserve its internal records. But timing and wording matter, an early confrontation can prompt cleaned-up notes and a well-crafted response letter, and a signed release or accepted reimbursement can extinguish the larger claim you have not discovered yet. Let counsel sequence these steps. The consultation costs nothing and the sequencing is often worth more than any single document.
Firms defending these cases argue that your silence was consent, that by receiving statements and not objecting promptly you ratified the trades. Courts and arbitrators treat that defense with appropriate skepticism, especially where the broker's explanations were misleading or the activity was concealed inside a busy statement, but the defense is a reason to act rather than wait. Every month between discovery and objection is a month the firm will try to use against you.
Unauthorized trading claims proceed in FINRA arbitration under the arbitration clause in your account agreement. The panel reviews the trading records, the account paperwork, and the communications, and the core of the case is exactly the comparison you started building above, trades without authorizations. Where the unauthorized trading sits inside a broader pattern, unsuitable products, excessive trading, supervision failures, the claim widens, and the firm's own duty to supervise its brokers is often what makes recovery collectable. I explained the full arbitration process in how securities arbitration works and which losses qualify in recovering investment losses through FINRA arbitration. As a CPA as well as an attorney, I reconstruct the account activity myself, because in these cases the trading record is the testimony.
Not in a non-discretionary account. Implied consent, standing instructions you never signed, and "you always say yes anyway" do not satisfy the rule. Discretion exists on paper or it does not exist.
It justifies a review. Isolated instances are sometimes errors, and errors have remedies too. Just as often, the first unauthorized trade an investor notices is the first one they noticed, not the first one that happened. The account records answer the question either way.
No. It can arise from sloppiness, poor supervision, or a broker cutting corners under time pressure. The legal question is whether you authorized the trades, not what the broker intended. Intent affects the claims available, not whether you have one.
I represent investors on a contingency basis. No recovery, no fee. Case costs and expenses are payable from any recovery as provided in the written engagement agreement, and the consultation is free, confidential, and available in English or Spanish.
If trades are appearing in your account without your approval, the rules are on your side and the evidence is already in your statements. Preserve the record, confirm what you signed, list the trades you never approved, and get the situation reviewed before you sign anything the firm puts in front of you. This is one of the clearest claims in securities arbitration, and clarity favors the investor who acts early.
I review these situations personally. The consultation is free, confidential, and available in English or Spanish. No recovery, no fee.
Seeing trades you never approved? The consultation is free, confidential, and available in English or Spanish. No recovery, no fee.
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