In Arizona, what are the legal remedies for unauthorized trading fraud?

Question: My parents recently passed away and left me with a sizable estate. I have my money in an account that is managed by a stockbroker. I was advised to sell a stock but told my broker that "I'd get back to him" before he should trade it. I was leaning towards trading the stock but don't know if I officially gave him the go ahead on it. It turns out the stock was actually traded and the broker tells me it was because he thought I already gave the authorization. Can I pursue legal action here? I am in Arizona.

Response:In most cases, a broker cannot buy or sell a security unless you give him your authorization and consent to do so before the trade is executed. The consent can given in writing or verbally. A broker may be liable for unauthorized trading if he makes a trade without your consent.

It is a violation of securities laws to engage in unauthorized trading because it is a breach of the broker’s fiduciary duty and a breach of contract. In some cases, the unauthorized trades may be voided and resulting losses can be recovered from your broker.

The U.S. Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets. Through the SEC, you have the option to file a complaint if you think you were the victim of broker fraud.

Each state also has their own set of statutes governing securities laws. In Arizona, information about securities states can be found on Arizona Corporation Commission's website.

Moving forward, please consult with a Securities Lawyer to determine the proper steps to take for your case.

Answered by Jason Tong

Additional Resource: Arizona Securities Statutes

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