Christopher Michael Bones, a broker at Summit Brokerage Services, Inc. in Eugene, Oregon, submitted a Letter of acceptance, waiver, and consent in which he was fined $5,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for 15 business days. Mr. Bones, who is currently with Ameriprise Financial Services, Inc. in Eugene, Oregon, consented to the sanction and to the entry of findings that he exercised trading discretion in customers' accounts following an agreed-upon investment strategy, but he did not consistently notify the customers prior to placing a trade in their accounts.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account sometimes referred to as a "managed account." Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks.
In this case, none of the customers provided Mr. Bones with written authorization to exercise any discretionary power, and his member firm did not authorize these accounts as discretionary. FINRA's findings stated that in fact, as was known to Mr. Bones, his member firm's policies prohibited the exercise of discretionary power in any client's account.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.