Articles Tagged with Unauthorized Trading

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from financial advisors who’ve swindled investors through unauthorized transactions. Can financial advisers trade your portfolio or buy investments without your permission? Only if you give them “discretionary” authority and definitely not if they’ve failed to obtain your written okay.

Without a doubt, brokers can’t do anything with your assets if they forge your signatures to make a transaction. Joffre Salazar, a former broker with LPL Financial, was terminated by the brokerage firm after he “forged two customers’ signatures and initials on documents connected to the purchase of fixed annuities, which Salazar then also submitted without the customers’ authorization,” according to FinancialAdvisorIQ.com.

Salazar, who first registered with Finra, the federal securities regulator, in 1991, registered with LPL in 2016, according to Finra. In April 2019, LPL filed a termination notice for Salazar, stating that he resigned voluntarily, but two months later amended the form to disclose that it started a review of Salazar’s “involvement in processing [an] annuity application without customer authorization,” Finra stated.

Chicago-based Stoltmann Law Offices has represented Morgan Stanley clients who’ve suffered losses as a result of fraudulent or negligent misconduct by Morgan Stanley and the firm’s financial advisors.

Here is a simple question too many investors do not know the answer to: Can brokers decide on their own when to buy or sell an investment in your account? Answer: Not unless you give them written permission to do so. If brokers ignore your instructions, you can file an arbitration claim and be awarded damages.  Joan A. Rudnick and an entity owned by her, Oak Trail Associates, filed a claim against her broker, Morgan Stanley, in October 2020. The claim charged the broker with “unauthorized trading, breach of contract and duty of loyalty, unjust enrichment and conversion,” according to Investment News.

Rudnick’s claim was filed when her broker sold Apple stock in her portfolio against her wishes. A retiree in her late 70s, Rudnick “had held the Apple stock for a long time and did not intend to sell it,” her attorney told Investment News. “She had put a no-trade restriction on the stock, but it was sold around March 2019. Morgan Stanley acknowledged the shares were sold without Rudnick’s authorization.”  Rudnick was awarded “$482,000 in compensatory damages, $83,372 in federal and state taxes, $45,000 in attorneys’ fees, $25,000 in brokerage fees, $5,000 in expert fees, $1,863 in costs and $375 for a non-refundable filing fee.” A Morgan Stanley spokesperson declined to comment to Investment News. “The arbitration award states the firm denied the allegations in the FINRA statement of claim and asked that it be dismissed in its entirety.” FINRA is the federal securities regulator that handles arbitration claims for investors.

Chicago-Based Stoltmann Law Offices has been representing California investors before FINRA arbitration panels for many years. We are looking into allegations made by an investor that allege that Ryan Raskin, who was registered with Merrill Lynch until he was discharged for cause in March 2020, executed unauthorized trades for a client. Merrill Lynch denied that complaint outright, which is a common practice used by brokerage firms when clients come to them with a complaint without being armed with an experienced FINRA investor-rights lawyer.

According to a story published by AdvisorHub.com, Raskin was employed with Merrill Lynch since 2016. On January 13, 2021, Mr. Raskin was barred by FINRA for failing to respond to requests for information. FINRA has the authority, under FINRA Rule 8210, to seek information and documents from any licensed, registered representative, even after the are terminated or are not working in the securities industry. As part of their enforcement mandate to enforce securities law and regulations, FINRA is given pretty broad discretion to seek out information related to its investigations, and in the event a broker like Raskin refuses to cooperate or ignores a valid request for information from FINRA, the penalty is a lifetime ban from the securities industry.  Sometimes brokers do this because they are out of the business and don’t really care if they lose their license to provide investment advice. Sometimes brokers ignore FINRA because they have something serious to hide.

Mr. Raskin was discharged from Merrill Lynch in March 2020 for “conduct involving business practices inconsistent with Firm standards, including inappropriate investment recommendation.” The impetus for FINRAs Rule 8210 request was this discharge by Merrill Lynch, which was reported to FINRA on Form U-5. Although the FINRA Acceptance, Waiver, and Consent (AWC), which was signed by Mr. Raskin, does not state any specific allegations with respect to misconduct. Still, Merrill Lynch discharged Mr. Raskin for “inappropriate investment recommendations” and one customer did make a complaint against him for unauthorized trading.

Chicago-based securities and investor protection law firm Stoltmann Law Offices, P.C., is currently investigating claims involving William Edward Torriente (Eddy Torriente) in connection with allegations he engaged in unauthorized trading. Eddy Torriente, who was employed with Comerica Securities from 2011 to September 2020, worked out of a branch office in Scottsdale, Arizona.  According to public reports, Eddy Torriente voluntarily resigned from Comerica on September 21, 2020 while undergoing an internal investigation by Comerica into allegations made by a client that Torriente placed unauthorized transactions in the client’s accounts.  Typically, if a complaint by an investor client is unfounded, the advisor doesn’t leave the firm.  According to FINRA, the complaint was “denied” by the firm but the timeline indicates there was very little time between the receipt of the complaint and the firm “denying” it.  Even more intriguing, Torriente “voluntarily resigned” before this client complaint was even received.  Mr. Torriente is now registered as an investment adviser representative for Wealthsource Partners, but is currently not a registered representative of a FINRA broker/dealer. If you or someone you know had dealings with Mr. Torriente and believe he executed trades in your account on an unauthorized basis, you should contact Stoltmann Law Offices for a consultation.

Unauthorized trading is a fundamental violation in the securities industry. These claims take multiple different shapes. The most obvious form is when a financial advisor, who does not have formal “discretion” in a customer’s account, goes ahead and places trades, either buys/sells stocks, bonds, options, mutual funds, etc., without first receiving approval from the client. These claims can also take the form of a failure to execute or failure to follow a client’s instructions.  If, for example, a client tells a broker to buy 100 shares of Apple, and the broker doesn’t do it, that is a failure to execute, and a form of unauthorized trading. These claims can become even more nuanced however and could involve situations where the broker fills some orders as instructed, but ignores others, or simply uses his discretion on what orders to execute.  Financial advisors simply cannot exercise this sort of discretion in a client’s account without formal, written agreements providing that discretion.

A broker who trades on an unauthorized basis violates several FINRA Rules and state securities regulations in doing so. For example, in Arizona, it is a violation of the Arizona Securities Act to trade on an unauthorized basis. See R14-4-130(16) which specifically identifies “Making unauthorized use of of securities or funds of a customer…for personal benefit” as an unethical practice in violation of the Arizona Securities Act, A.R.S. §§ 44-1961(A)(13) and 44-1962(10). Brokers traditionally trade on an unauthorized basis for one reason – to generate commissions.  Further, FINRA Rule 2010 prohibits unauthorized trading because such a practice is considered to be inapposite to the concept of commercial honor and just and equitable principles of trade.

According to records with the Financial Industry Regulatory Authority (FINRA), Raymond James broker Clifford Vatter allegedly made unsuitable investment recommendations, misrepresented and omitted material facts, breached fiduciary duty, made unauthorized withdrawals, and other things. These are all against securities laws and internal firm rules. A broker such as Mr. Vatter must take into account a client’s age, net worth, investment objectives and investment sophistication before recommending or selling an investment. If he does not, his brokerage firm may be liable for investment losses on a contingency fee basis, which means we only make money if you recover yours. Raymond James has claims brought against it in the FINRA arbitration forum for allowing its brokers to violate securities laws.

According to online reports with FINRA’s BrokerCheck, Clifford Vatter was registered with J.C. Bradford & Co. in New York, New York from June 1983 until August 2000, UBS in Weehawken, New Jersey from August 2000 until May 2002, Morgan Keegan in Louisville, Kentucky from June 2002 until February 2013 and Raymond James in Louisville, from February 2013 until August 2017. He has six customer disputes against him, and is not currently registered as a broker.

Stoltmann Law Offices is investigating Leonard Tanner, formerly of PNC Investments. Tanner is accused of allegedly executing discretionary transactions in 90 accounts of customers under a verbal authorization, but not a written one. His current firm, City Securities Corporation, requires a written authorization. Unauthorized trading is a violation of securities rules and regulations. Leonard Tanner was registered with Raffensperger, Hughes & Co in Indianapolis, Indiana from August 1969 until July 1995, Natcity Investments in Indianapolis, from July 1995 until November 2009 and PNC Investments in Indianapolis from November 2009 until October 2010. He is currently registered with City Securities Corporation in Indianapolis and has been since October 2010. He has one customer dispute against him. If you invested money with Leonard Tanner, please call our securities law office in Chicago at 312-332-4200 to speak with an attorney to discuss your options. We sue firms such as PNC Investments and City Securities Corporation for not reasonably supervising their brokers.

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