From Securities Regulator-List Of Things Your StockBroker Is Prohibited From Doing

From Securities Regulator-List Of Things Your StockBroker Is Prohibited From Doing

From Securities Regulator-List Of Things Your StockBroker Is Prohibited From Doing 150 150 Robert Rex, Esq.

The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.

FINRA lists certain types of conduct that is prohibited in the securities industry, including the following:

  1. Recommending to a customer the purchase or sale of a security that is unsuitable given the customer’s age, financial situation, investment objective and investment experience. Investment in a particular type of security may be unsuitable, or the amount or frequency of transactions may be excessive and therefore unsuitable for a given customer.
  2. Purchasing or selling securities in a customer’s account without first contacting the customer and receiving the customer’s authorization to make the sale or purchase, unless the broker has received from the customer written discretionary authority to effect transactions in the account or the broker was given discretion as to price and time.
  3. Switching a customer from one mutual fund to another when there is no legitimate investment purpose for the switch.
  4. Misrepresenting or failing to disclose material facts concerning an investment. Examples of information that may be considered material and that should be accurately presented to customers include: the risks of investing in a particular security; the charges or fees involved; company financial information; and technical or analytical information, such as bond ratings.
  5. Removing funds or securities from a customer’s account without the customer’s prior authorization.
  6. Charging a customer excessive markups, markdowns or commissions on the purchase or sale of securities.
  7. Guaranteeing customers that they will not lose money on a particular securities transaction, making specific price predictions or agreeing to share in any losses in the customer’s account.
  8. Private securities transactions between a broker and a customer that may violate FINRA rules, particularly where the transactions are done without the knowledge and permission of the sales representative’s firm.
  9. “Trading ahead,” which involves placing an order for the firm’s account before entering a customer’s limit order, without having a valid exception.
  10. Failure by a market maker to display a customer limit order in its published quotes, without a valid exception.
  11. Failing to use reasonable diligence to see that a customer’s order is executed at the best possible price, given prevailing market conditions.
  12. Purchasing or selling a security while in possession of material, non-public information about an issuer.
  13. Using manipulative, deceptive or other fraudulent methods to effect a transaction in, or induce the purchase or sale of, a security.

LInk to FINRA Investor Education website.

If you have questions about losses in your brokerage account or the way your brokerage account has been handled, contact us for a no charge consultation with an experienced securities attorney.


Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

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Rex Securities Law

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