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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
The Yin and Yang of Discretionary Trading
by Howard Haykin
That's where one broker with Spencer-Winston Securities Corporation, went wrong.
While the Jersey City, NJ-based firm permitted its brokers to exercise discretionary authority, it required them to submit duly executed Discretionary Trading Forms. The broker abused the ‘privilege’ by submitting to Spencer-Winston at least 10 Discretionary Trading Forms with photocopied (not original) customer signatures. Thereafter, he used his ‘discretionary authority’ to execute nearly 600 transactions in 14 customer accounts.
Three aspects of this case are particularly surprising. The broker knew, or should have known better, in that …
- He had 13 years’ experience with the firm and was well-versed in its policies.
- He served the firm in supervisory capacities: as Registered Options Principal, General Securities Principal and Operations Principal.
- His customers had orally or implicitly given him authority to exercise discretion in their accounts. So providing original signatures would have been, at worst, a minor inconvenience.
INVESTOR TAKE-AWAYS. Financial institutions require contemporaneous authorizations from their customers for most, if not all, of their services. So assume that written authorizations are required. Which means that, if your broker doesn’t ask for your signature, speak up and volunteer to sign whatever forms are necessary. It's for your protection, and the protection of the firm and your broker.
[For further details, click on … FINRA Case #2018057296401.]