Customer Claims Against Brokerage Firms and Individual Brokers, Securities Attorney Chicago

QUESTION

What is unauthorized trading?

ANSWER

Unless a customer has given his broker or a third party a power of attorney to make trades in his account without first obtaining his permission, no one can make a trade in the customer's account unless he has first given his prior permission for the trade. A broker, nonetheless, may be able to defend a claim for unauthorized trading based on the legal principles of ratification, estoppel, and waiver. For example, if the customer has allowed the broker to make trades without obtaining his prior consent for some period of time, an arbitration panel or court may find that he ratified the practice.

< Back to FAQs