Item: Malecki Law
Rating: 5
Author: Mario

Unauthorized Trading and Churning

Respected NYC Securities Lawyers Dedicated to Recovering Investors’ Losses in the Wake of Advisor Misconduct

At Malecki Law, we understand the damage that unauthorized trading and churning can do to your portfolio. Not only can these practices result in significant financial losses, but they also undermine the trust between investors and their financial advisors. Our securities lawyers represent investors nationwide in claims against financial advisors who engaged in unauthorized trading and churning.

What Is Unauthorized Trading?

Unauthorized trading occurs when a broker executes transactions in your account without your explicit approval. Unless your account is discretionary—meaning you have given your broker written authorization to make decisions on your behalf—every trade must be approved by you in advance. Examples of unauthorized trading include:

Buying or selling securities without prior consent.
Ignoring client instructions regarding investment preferences.
Engaging in transactions that exceed the agreed-upon risk tolerance or investment strategy.

Unauthorized trading is a serious violation of FINRA rules and investor trust. It is essential to monitor your account statements and trading activity regularly to ensure all transactions align with your expectations and instructions.

What Are the Different Types of Investment Accounts?

Investment accounts generally fall into two categories:

Discretionary Accounts: In these accounts, investors grant their broker authority to make trading decisions without obtaining prior approval for each transaction. This arrangement requires explicit written consent and is subject to stringent regulations.
Non-Discretionary Accounts: These accounts require the broker to obtain the investor’s approval for each trade. Unauthorized trading in non-discretionary accounts is a clear breach of FINRA rules.

Understanding the type of account you have is critical, as it determines the level of control your broker has over your investments and your ability to hold them accountable for unauthorized actions.

What Are the FINRA “Best Execution” Requirements?

The FINRA "Best Execution" rule mandates that brokers must seek the most favorable terms reasonably available when executing client orders. This includes:

Assessing the price, speed, and likelihood of execution.
Ensuring trades are executed at competitive prices in line with prevailing market conditions.
Avoiding conflicts of interest that could compromise the quality of execution.

Failure to adhere to best execution standards can result in financial harm to investors and regulatory penalties for brokers. If you suspect your broker failed to provide best execution, consult a securities attorney to evaluate your case.

What Is Churning?

Churning is the excessive buying and selling of securities in a client’s account to generate commissions for the broker rather than furthering the client’s investment objectives. Signs of churning include:

Frequent trades that do not align with your investment strategy.
High turnover rates in your portfolio.
Disproportionate commission costs relative to the account’s value.

Churning is not only unethical but also a violation of FINRA’s suitability, best interests, and anti-fraud rules. It can deplete your account’s value and result in significant financial losses.

What Should I Do if I Notice Unauthorized or Excessive Trading in My Brokerage Account?

If you suspect unauthorized trading or churning in your account, take the following steps immediately:

Document the Activity: Gather account statements, agreements, trade confirmations, and any communication with your broker.
Report the Issue: Notify your brokerage firm in writing and request an explanation for the activity.
Consult an Attorney: Reach out to a securities lawyer with experience in unauthorized trading and churning cases. They can help you evaluate your situation and determine the best course of action.

Acting promptly is crucial to minimizing your losses and preserving evidence. Regulatory bodies like FINRA take these violations seriously, and you may be entitled to recover your losses through arbitration or other legal remedies.

Protect Your Investments With Malecki Law

Malecki Law has a proven track record of representing investors in cases involving unauthorized trading and churning. Our attorneys are skilled in identifying violations, building strong cases, and pursuing damages on behalf of our clients. If you suspect misconduct in your brokerage account, contact Malecki Law at (212) 943-1233 to schedule a consultation. Let us help you protect your investments and hold those responsible for your losses accountable.

★★★★★

I highly recommend Jenice and her team at Malecki Law. I had a challenging, and lengthly case. Jenice was professional, very knowledgeable, and a pleasure to work with. She managed to make the process far less stressful during a very difficult time. They care about their clients, and it definitely shows. Mario

Jenice is truly a miracle worker and one of the top securities lawyers. She handled a very difficult case for us, displaying her legal knowledge, intelligence, and savviness throughout the process. I cannot recommend her enough. The quality of work from her team rivals that of corporate law firms. She was always available, extremely professional, and made sure to know all the details of the case. We were very fortunate to have been referred to Jenice and highly recommend her for any securities related legal issues. Nathan A.

An excellent professional who represented us in trial regarding a bank fraud, an unexpected and difficult time. A professional that worked hard, persevering and who stood toe to toe against firms that had a team of excellent lawyers backing them up. Her unflinching determination really stands out, it makes you feel you have someone who really cares about trying to recover what you lost from the people that wronged you. Salomon Levi

It is difficult to thank you in words when gratitude comes from the heart, so I will try to link feelings with writing. It is essential for us to mention your excellence as a professional, your aptitude on legal fields, and your unavoidable persistence. All of these virtues that elevate the profession you exercise in such an admirable way, go hand in hand with your sense of ethics, your human warmth and the transparency in your actions. To sum up, thank you for being a listening ear and for having the right word while transmitting information about the legal process. Having you as our representative during such an adverse situation was a privilege and enough reason for our eternal gratitude. Angeles Aparain

To say that my securities litigation was complex would be a severe understatement. With multiple parties involved and spanning many years, trying to understand the issues was daunting to say the least. Jenice and her team broke down the transactions by segment and by party uncovering every hidden expense. In the end, I was more than happy and could not thank Jenice and her team enough. I would not hesitate to recommend Jenice to anyone. She is highly professional, incredibly knowledgeable, well connected to industry experts, has a tireless work ethic and is so pleasant and easy to communicate with. Five stars for sure! Andrew Loughrane

Jenice was also special in giving us all the personal attention we needed, plus the tireless support of her crack team, over the course of ~18 mos. She talked us through every step of the way, and was open to discussing specific negotiation tactics, not glossing over anything. Dave Bliss

I recently worked with Jenice to negotiate a business buyout, and I couldn't be more pleased with the experience. From the start, Jenice was incredibly helpful and deeply invested in achieving the best possible outcome for me. Her expertise and dedication were evident in every step of the process. David

I can’t say enough about Jenice and her team- they set the standard. As an Army veteran, I deeply respect the values they reinforce while operating at a level of tenacity that is unmatched. They handled the entire process with empathy and kindness- yet were firm and honest regarding expectations and outcomes. Communication was clear and swift. Their breadth of knowledge and experience provided comfort during a stressful time and was impressive to watch unfold. I’m very happy with the outcome. Thank you Jenice and team for making giants seem extremely small. Sharron Todd

My experience with jenice was incredible. You want a lawyer who is advocate for you and fights for you with passion. She came along a time in my life that I needed an advocate who truly cared about me and my case. Highly recommend. Pat Brown

I had the privilege of working with Malecki Law, and I must say it was an outstanding experience. Jenice, Jacqueline, and Adam consistently demonstrated remarkable responsiveness, offering excellent advice that reflects their diligence and precision. Their bold and intelligent approach, combined with an excellent attitude, truly sets them apart. I highly recommend Malecki Law to anyone seeking top-notch legal assistance. Mohsen Chitsaz

Jenice Malecki, is one of the most helpful individuals Ive had the pleasure of speaking with. She is super knowledgeable. She helped me navigate the ever changing world of securities law. You will find her understanding of complex matters helpful and insightful. She is straightforward and candid. She makes your options easy to understand. I would recommend her without any hesitation. 10/5 stars! Enrique Tiburcio

I highly recommend Jenice and her team! They are extremely professional, organized, and kept me updated throughout the entire process. We went to arbitration and won! Jenice is outstanding and I am so grateful for her expertise. Chelsea Polhemus

Submit a Law Firm Client Review