Gary Costello, a former broker and investment advisor at AEGIS CAPITAL CORP. (CRD 15007), has been accused of executing unauthorized trades in a client’s account during early 2023. The client, who was an authorized party to the account, discovered the alleged misconduct after reviewing account statements. The dispute was settled on January 4, 2024.
Unauthorized trading is a serious form of investment fraud that can lead to significant financial losses for investors. According to a Bloomberg article, the Financial Industry Regulatory Authority (FINRA) has been cracking down on firms and brokers engaging in unauthorized trading and other forms of misconduct.
Understanding Unauthorized Trading and FINRA Rule 2010
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Unauthorized trading occurs when a broker executes trades in a client’s account without obtaining prior consent. This practice violates FINRA Rule 2010, which requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Brokers must always obtain client approval before making any transactions on their behalf.
The Importance of Proper Authorization
Brokers have a fiduciary duty to act in their clients’ best interests. By executing unauthorized trades, they breach this trust and expose investors to unwarranted risks. Unauthorized trading can lead to significant financial losses, as the trades may not align with the client’s investment objectives, risk tolerance, or financial circumstances.
Protecting Investors from Unauthorized Trading
Investors can protect themselves from unauthorized trading by regularly reviewing their account statements and trade confirmations. Any discrepancies or unfamiliar transactions should be promptly reported to the brokerage firm and, if necessary, to regulatory authorities such as FINRA.
Red Flags for Financial Advisor Malpractice
Investors should be vigilant for red flags that may indicate financial advisor malpractice, such as:
- Unauthorized trades
- Excessive trading or churning
- Unsuitable investment recommendations
- Lack of diversification
- Failure to disclose material information
Recovering Losses Through FINRA Arbitration
Investors who have suffered losses due to unauthorized trading or other forms of financial advisor misconduct may be able to recover their losses through FINRA arbitration. This process allows investors to seek compensation from their broker or brokerage firm in a private, out-of-court setting.
Haselkorn & Thibaut: Experienced Investment Fraud Attorneys
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Gary Costello and AEGIS CAPITAL CORP. The firm has over 50 years of combined experience and a 98% success rate in helping investors recover their losses through FINRA arbitration.
If you have suffered losses due to unauthorized trading or other forms of financial advisor misconduct, Haselkorn & Thibaut offers free consultations to help you understand your legal options. With their “No Recovery, No Fee” policy, you can trust that they will fight tirelessly on your behalf to help you recover your losses.
To schedule your free consultation, call Haselkorn & Thibaut‘s toll-free number at 1-888-628-5590.
