The founding attorneys of CMF spent the majority of their careers at large New York defense firms, representing brokers and broker-dealers in securities litigation, arbitration, administrative and regulatory proceedings before FINRA and the U.S. Securities & Exchange Commission. Having extensive experience working on both sides of the fence, we have a unique understanding of the complexities of securities arbitration, mediation, regulation and litigation. Because CMF represents both plaintiffs and claimants in civil matters, and defendants and respondents in administrative and regulatory matters, we are familiar with all of the relevant legal arguments.
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NYSE Rule 408(a) and FINRA Rules 2510(b) and 2020 explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading violates just and equitable principles of trade and constitutes violations of Rule 10b and 10b-5 due to its fraudulent nature.
There are certain exceptions. For instance, if a customer has a margin account and the value of the account falls below the brokerage firm’s requirements, the broker may be able to sell the customer’s securities without consulting the customer beforehand.