Investor Rights if Stock Broker Traded Shares Without Your Consent

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Investors Have the Right to Control Their Investments

As an investor, you have rights when a stock broker or financial adviser buys or sells shares without your permission. This is especially a problem if you incurred losses as a result of your stock broker’s or financial adviser’s unauthorized trade in your portfolio.

Broker Must have Written Agreement to Invest Funds at His Discretion

Of course, you may give your stock broker permission to trade shares without first calling you. This is routine in mutual funds where the fund manager buys and sells without consulting with the investors. If you have entered into a discretionary account agreement with your stock broker, the stock broker has your consent to buy and sell at the stock broker’s discretion. But without a discretionary account agreement, your stock broker very likely violated your legal rights when making a trade without your consent.

Weigh Practical Considerations in Pursuing a Legal Action

If your losses are small, it’s probably not worth burning a bridge and making the stock broker liable for the unauthorized trade. But if your losses are significant, you should consult with an attorney experienced in representing investors in securities law.