What is that stock doing in my account? How to detect and deal with unauthorized trades in your account.
Have you ever been surprised when you saw a stock in your account that you did not know? Or, have you ever been surprised to see that a stock was missing from your monthly account statement? Did you ever receive a trade confirmation for a stock you did not buy or sell? If so, your broker may have made an unauthorized trade.
Remember that your broker cannot make any changes to your account without first getting your approval. Unless you have given your broker written discretionary power over your account, you are the only person with the power to make buy or sell decisions in your account. If your broker made a trade and did not speak with you beforehand, that broker violated of the NASD's prohibition on unauthorized trading.
Also remember that an unauthorized trade is an illegal act and once it is done, the illegal act cannot be undone. So if your broker called you after the trade to get you to agree to the trade, it is still an unauthorized and illegal trade.
If you do see an unauthorized trade in your account, you should tell your stockbroker as soon as possible that you did not order the trade. At the same time you should insist that he or she corrects the mistake immediately, and then you should follow up with a letter to your broker and his manager. Even if the trade happened some time ago, you will have a chance of getting the trade reversed because the common 'ratification' defense may not work for the broker.
If you think your broker has undertaken an unauthorized trade in your account, consult the Savage Law Firm, P.A. to learn your rights and see if you should sue your broker.
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