Can a Broker Sell My Stocks Without My Permission? (2024)

You looked into your investment account and discovered that a number of your shares had been sold without your permission. You didn’t give the go-ahead, so you’re understandably confused, frustrated, and angry.

What do you do now?

First, you need to determine who sold your stocks. If it was your broker, you may be finding yourself asking whether or not yourbroker can sell stocks without your permission.

Can my broker sell my stocks without permission?

Your broker cannot sell stocks without your permission, unless you have given written authorization to do so.This is calledunauthorized tradingand not permitted under securities industry rules.

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However, while the appropriate authorization must always be obtained, a broker does not necessarily need to obtain express permission for every transaction. In this article we will reviewthe two circ*mstances in which a broker may sell securities without prior notice to or consent from the client.

Note: If you believe you have suffered losses on your investment as a result of unauthorized trading, you should speak toa stockbroker fraud attorneyabout your legal rights.

Is Your Investment Account a Discretionary Account?

The first instance when a broker may sell stocks without your permission is if they are trading in a discretionary account. A discretionary account is one in which the broker has the authority to make investment decisions on behalf of the client, without prior approval from the client.

If you are unsure whether or not you have a discretionary account, you learn about thedifference between a non-discretionary and discretionary account here.

In order for a broker to sell stocks in a discretionary account, they must have what is called “discretion.” This means that the broker must have reasonable grounds to believe that the sale is in the best interests of the client.

The key word in this definition is “reasonable.” This means that a broker cannot simply sell stocks without your permission because they feel like it. There must be a reason for the sale, such as an expectation of a market decline or other adverse event that could impact the value of the security.

If you do not agree with a decision made by your broker in a discretionary account, you have the right to object and have the decision reviewed by a supervisor.

Is There a Margin Call on Your Account?

The second instance when a broker may sell stocks without your permission is in response to a margin call. A margin call is when the broker demands that the client deposit additional funds or securities to cover the cost of the stock purchased on margin. Technically, you probably gave him permission when you opened your margin account.

If you do not meet the margin call, the broker has the right to sell the securities to cover the margin debt. This is done in order to protect the interests of the broker and the securities lending institution.

Trading on a margin account is a risky investment and can result in substantial losses. For this reason, it is important to understand the risks before opening a margin account. You can learnmore about margin trading on FINRA’s website.

Get a Second Opinion: Contact a Stockbroker Fraud Lawyer Today

If you have discovered that your broker sold stocks without your permission, you may be feeling overwhelmed and confused. You may be wondering what your legal rights are and whether or not you can take action.

The best way to determine your legal rights and options is to speak with astockbroker fraud lawyer.

The Law Offices of Robert Wayne Pearce, P.A.specializes in representing investors who have suffered losses as a result of investment fraud. We offer free, no-obligation consultations so you can learn more about your legal rights and options.

Call us today at (800) 732-2889 to speak with an stockbroker fraud lawyer.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.