William A. Sloane of Glastonbury, Connecticut, a registered representative with Buell Securities Corp., was fined $5,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in all capacities for twenty days after engaging in unauthorized discretionary trading in customer accounts. Letter of Acceptance, Waiver and Consent, No. 2014042924501 (Nov. 3, 2015).
According to the AWC, from December 2012 – September 2013, while associated with his firm, Sloane had effected roughly one hundred and fifty-three discretionary transactions in the account of customer, IF, without first obtaining prior authorization from the customer. The AWC reported that Sloane’s employer had not authorized the account in writing as being discretionary. FINRA found Sloane’s conduct in this regard was violative of NASD Conduct Rule 2510(b) and FINRA Rule 2010.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
By definition, a broker is liable for making unauthorized trades without the customer’s prior authorization. Absent written discretion, it is a violation of Section 10(b) of the Exchange Act, and Rule 10b-5, as promulgated thereunder, to effect transactions in customer accounts without their prior authorization or consent.
Customers also have a duty to review securities purchase and sale confirmations and review their securities accounts. If a stockbroker has placed unauthorized transactions in a customer account, the customer under most circumstances has a duty to act, or a duty to complain, or else generally, the customer may be deemed to have ratified these transactions, with actual or imputed knowledge, by doing nothing. Under such circumstances, a customer’s damages may be limited to the time they knew or should have known about the unauthorized transactions.
Public disclosure records via FINRA’s BrokerCheck reveal that Sloane has been subject to fourteen disclosure incidents. Of them, ten pertain to customer disputes that were either settled or involved customers receiving an award against Sloane. As evidenced by the customer disputes, customers had alleged unsuitability, wrongful discretion, unauthorized trading, and excessive trading.
Guiliano Law Group
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