Can an investment advisor make transactions on a client’s behalf without the client’s permission?

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Or does this fall under investment advisor misconduct?

Isabelle Barunga Answered question March 25, 2022

An investment advisor cannot execute a trade in a client’s account unless the client has granted the advisor discretion or control over the decision-making process. If a choice or authority has not been given, an investment advisor must obtain authorization before executing any trades in the client’s account. Unauthorized transactions carried out by an investment advisor fall under investment advisor misconduct.

Aside from unauthorized trading, there are many other examples of investment advisor misconduct. These include:

  1. Investing client money in unsuitable investments.
  2. Failure to fairly and honestly represent clients when recommending an investment.
  3. Overconcentration, or failure to diversify investments.

Investors that have been victims of investor advisor misconduct deserve just compensation. A securities litigation attorney can help you learn more about the legal options available as you deal with investment advisor misconduct.

Isabelle Barunga Answered question March 25, 2022
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