Key Takeaway: Unauthorized trading occurs when a broker executes trades in your account without your consent — and it’s one of the clearest FINRA rule violations, potentially entitling you to rescind the transactions and recover all resulting losses.

Unauthorized Trading Lawyer — When Your Broker Trades Without Permission

You open your brokerage statement and see trades you don’t recognize. Positions you never approved. Buys and sells that happened without your knowledge or consent. Your first reaction might be confusion — then anger.

You’re right to be angry. Unauthorized trading is one of the most clear-cut violations of investor rights in the securities industry. When a broker trades your account without permission, they’ve crossed a line that FINRA rules draw in bold.

The impact can be devastating. A single unauthorized trade can expose your portfolio to risks you never agreed to accept. Multiple unauthorized trades can fundamentally alter your investment strategy, risk profile, and financial outlook — destroying years of careful saving and planning.

Haselkorn & Thibaut has been recovering losses from unauthorized trading for over 50 years. Our 98% success rate reflects our ability to prove what should be obvious: if you didn’t authorize the trade, your broker broke the rules.

Call 1-888-885-7162 for a free consultation, or contact us online to speak with an unauthorized trading lawyer.

What Is Unauthorized Trading?

Unauthorized trading is the execution of a transaction in a customer’s account without the customer’s prior authorization or consent. This includes buying or selling securities, options, mutual funds, or any other investment product without the account holder’s express approval.

Unauthorized trading violates:

FINRA Rule 3260 — Requires brokers to obtain customer authorization before executing trades in non-discretionary accounts
FINRA Rule 2010 — Requires brokers to observe “high standards of commercial honor and just and equitable principles of trade”
FINRA Rule 2111 — Requires that all recommendations be suitable for the customer (an unauthorized trade may also be unsuitable)

The distinction is straightforward: If you didn’t authorize the trade, and your broker didn’t have discretionary authority, the trade is unauthorized — period. You don’t need to prove the broker intended to harm you. The lack of authorization itself is the violation.

For a detailed explanation of the rules and your rights, see our guide: Unauthorized Trading: When Your Broker Trades Without Permission →

Signs You May Be a Victim of Unauthorized Trading

Trades on your statement you didn’t discuss or approve — You review your monthly statement and see transactions you have no recollection of authorizing. Your broker made buys, sells, or exchanges without mentioning them to you.
Your broker says “don’t worry about it, I’ll handle it” — If your broker discourages you from reviewing trades or tells you they’ll “take care of everything,” they may be making unauthorized trades under the assumption you won’t notice.
High volume of trades in a short period — A sudden burst of trading activity that you didn’t request or discuss is a red flag for both unauthorized trading and churning. See Churning & Excessive Trading →
Trades executed while you were unavailable — If trades occurred while you were traveling, in the hospital, or otherwise unreachable, and your broker didn’t have discretionary authority, those trades are unauthorized.
Verbal approval claimed for trades you don’t recall — Some brokers claim they called you and obtained verbal approval for trades. If you have no memory of these conversations, or if the broker cannot produce recordings (as many firms record calls), the authorization is questionable.
Your account type is non-discretionary but traded as if discretionary — If your account agreement states it’s a non-discretionary account (meaning the broker needs your approval for each trade), but your broker is trading freely, every trade made without your specific approval is unauthorized.

Call 1-888-885-7162 for a free consultation, or contact us online — we can review your statements and identify unauthorized trades.

How We Build Your Unauthorized Trading Case

Statement review — We examine your brokerage statements and trade confirmations to identify transactions you didn’t authorize. We cross-reference your statements with your recollection of approved trades and any notes or communications you have with your broker.
Account type verification — We confirm whether your account is discretionary or non-discretionary. In a non-discretionary account, every trade without your prior approval is unauthorized. In a discretionary account, we verify whether the broker exceeded the scope of their written discretionary authority.
Authorization evidence — We obtain the brokerage firm’s records of trade authorizations, including order tickets, recorded phone calls, and electronic communications. If the firm cannot produce evidence that you authorized a trade, that trade is presumptively unauthorized.
Damages calculation — We calculate the losses caused by each unauthorized trade, including the direct losses from trades that declined in value, the tax consequences of unauthorized sales, and any excess commissions charged.
Pattern evidence — We establish whether the unauthorized trading was an isolated incident or a pattern of conduct. A pattern of unauthorized trades strengthens your claim and may support claims for punitive damages.

Common Situations Involving Unauthorized Trading

Elderly and Vulnerable Investors

Seniors who may not regularly check their statements or who have cognitive impairments are frequent targets of unauthorized trading. A broker who knows their client won’t notice unauthorized trades has an easy path to generating commissions through illicit activity. FINRA has specific rules to protect senior investors, including Rule 2165 (Financial Exploitation of Specified Adults). See Elder Financial Abuse →

“Verbal Authorization” Claims

Brokers sometimes claim they received verbal authorization for trades that the investor doesn’t recall approving. While verbal authorization can be valid, it’s also easily fabricated. If your brokerage firm records phone calls (as many do), we can obtain those recordings. If they don’t record calls, the absence of a paper trail works in your favor — the broker can’t prove authorization.

Discretionary Authority Abuse

Some accounts have written discretionary authorization, which allows the broker to trade without specific pre-approval for each trade. But discretionary authority has limits — the broker must still trade within the scope of your investment objectives, and the firm must supervise the discretionary account. If a broker trades beyond the scope of their discretionary authority, those excess trades are unauthorized.

Online and Electronic Trading

With the rise of electronic trading platforms, some brokers execute trades through online portals using client credentials. If your broker accessed your online account and placed trades without your knowledge, those trades are unauthorized — and may also constitute identity theft or computer fraud.

What You Can Recover

Through FINRA arbitration, victims of unauthorized trading may recover:

Rescission — The unauthorized trades are unwound, and your account is restored to its position before the unauthorized transactions
Net losses from unauthorized trades — The difference between what you lost and what you would have had without the unauthorized activity
Excess commissions — All commissions generated by unauthorized trades
Interest — Compensation for the time your money was improperly invested
Attorneys’ fees — May be awarded by the arbitration panel
Punitive damages — Unauthorized trading is a clear rule violation, and a pattern of unauthorized trades may support punitive damages

Unauthorized trading claims have among the highest success rates in FINRA arbitration because the violation is binary: either you authorized the trade or you didn’t. When we can show that a trade occurred without your authorization, the broker is liable for the resulting losses.

Why Choose Our Firm

Over 50 years of experience recovering losses from unauthorized trading
98% success rate across all investment fraud cases
Free consultation — we evaluate your account at no cost
Contingency fee — you pay nothing unless we recover money for you
Nationwide representation — we handle cases in all 50 states
Former Wall Street defense lawyers — we know how brokerages defend unauthorized trading claims
Fast results — unauthorized trading claims are among the most straightforward to prove, often leading to quicker settlements

Call 1-888-885-7162 for a free consultation, or contact us online — we can quickly determine whether your broker made unauthorized trades.

Related Practice Areas

FAQ

What counts as unauthorized trading?
Any trade executed in your account without your prior consent is unauthorized if your account is non-discretionary. This includes buying securities you didn’t approve, selling positions you didn’t want to sell, and making any investment decision without your specific authorization. If your broker doesn’t have written discretionary authority, every trade requires your approval.

What if my broker says I gave verbal approval?
Verbal authorization can be legitimate, but it’s also easily disputed. If your brokerage firm records phone calls, we can obtain those recordings to verify whether authorization was given. If they don’t record calls, the broker has no evidence of authorization — and the burden is on them to prove it. Courts and arbitrators generally view “he said / she said” claims about verbal authorization with skepticism, especially when the investor has no recollection of the conversation.

Can I recover losses even if some unauthorized trades made money?
Yes. Unauthorized trading claims can seek rescission of all unauthorized trades — not just the losing ones. If your broker made ten unauthorized trades, three of which were profitable and seven of which lost money, you may still be entitled to unwind all ten trades and recover your pre-trade position. The violation is the lack of authorization, not the outcome of the trade.

How long do I have to file an unauthorized trading claim?
FINRA arbitration claims must generally be filed within 6 years of the events giving rise to the dispute. However, earlier filing is better because evidence is more available and memories are fresher. Some state statutes of limitations may impose shorter deadlines, particularly for common law claims like conversion or fraud.

Is unauthorized trading a crime?
Unauthorized trading can constitute both a FINRA violation and a criminal act. Depending on the circumstances, unauthorized trading may violate federal securities laws, state theft/conversion statutes, computer fraud laws, and elder abuse statutes. While our firm pursues civil recovery through FINRA arbitration, we can also refer cases for criminal investigation when appropriate.

What if my brokerage firm says I’m responsible for monitoring my own account?
Brokerage firms have a supervisory obligation under FINRA rules. They cannot deflect responsibility by claiming you should have caught the unauthorized trades yourself. FINRA Rule 3110 requires firms to establish and maintain a system to supervise the activities of their brokers — including detecting and preventing unauthorized trading. If the firm’s supervision was inadequate, they share liability for the resulting losses.

This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.