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Financial adviser sold and bought stock without authorization

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Junior Member
What is the name of your state? CO

Our financial adviser sold one particular company stock and purchased another company stock. He left a message on our phone indicating his plan, but we didn't receive it until after he had made the transactions. We never spoke to us and we did not authorize these transactions. He has never had authorization to do transactions without our consent. We have consequently lost a lot of money on those transactions. We complained to the managing partner and he indicated they would have to send the issue to their compliance department and would get back to us. We kept following up weekly, sometimes twice a week, and were told someone would get back to us, but no one ever did. After a month of this, we were finally told we would be receiving a letter in two weeks time and to wait until we received that letter. The letter simply indicated the managing partner's willingness to meet with us and that they would refund the transaction commission that the adviser received for doing the unauthorized transaction. During this time period of well over a month, our portfolio lost a tremendous amount of money and our adviser was not in touch with us and frankly, we did not want to deal with him. We had told the managing partner that we had lost confidence in our adviser given what he had done. We feel they breached their fiduciary responsibility in managing our portfolio, particularly during a time when the stock market was extremely volatile, and nothing was done with our portfolio to hedge our losses as they internally worked through our complaint. We were in limbo...to our detriment. We would like to know if we have any legal recourse, given our substantial losses, and what that legal recourse might be. The managing partner has offered to meet with us. Right now, our portfolio is not being managed since we are not in contact with the adviser. We plan to move our portfolio away from this company, but need to find out if we have any legal standing and if we need to wait to get this resolved (if we have legal recourse) before we move it.


Senior Member
Sorry, but your loss of a "tremendous" amount of money is on you. The minute you found out about the unauthorized transaction you could have ordered the stock sold and the old stock repurchased the same day. Your losses would have been minimal.

No reason you can't move your portfolio immediately and deal with the firm afterwards.

As to dealing with the firm, delay is the deadliest form of denial and they will shine you on as long as you let them. You would be wise to consult some sort of malpractice attorney and see if it's worth suing or at least having the attorney scare them into ponying up more money than just the pittance of a commission refund.


Junior Member
Thank you both for your very helpful information. We didn't move the portfolio away from them immediately because we believed, apparently erroneously, that we would lose our leverage with them and they would not feel compelled to respond to us if we weren't current clients. It sounds like we should proceed with our plan to change firms and continue to deal with them in the aftermath. And yes, the commission refund was a pittance. At this point, would you recommend meeting with the managing partner and is there anything we should bring up or not bring up (i.e. threat of legal action, FINRA complaint) in that meeting? We don't want to screw anything up. I presume he will simply offer up a new adviser, along with the commission refund.


Senior Member
My two cents worth.

Get your money out of there.
Don't meet with anybody.
Don't threaten, just do.
File your FINRA complaint.
Consult an attorney for a possible malpractice lawsuit.

You aren't likely to get anything but talk out of those people while they circle the wagons.

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