Securities Lawyers Blog
Financial advisor Paul Porter, currently employed at Wells Fargo Clearing Services, LLC (Wells Fargo), has been subject to at least four customer complaints during the course of his career. His most recent customer complaints allege unauthorized trading and unsuitability. All of Porter’s complaints have occurred at Wells Fargo – his most recent place of employment. According to a BrokerCheck report, in 2018 Porter was accused of selling the client’s stock without her knowledge. This matter against him settled approximately $61,000.00. In 2012, another client accused porter of engaging in unauthorized trading. Then, in October 2008, another client accused porter of making unsuitable investments. This matter ultimately settled for $30,000.00.
Unauthorized trading occurs when a broker sells securities without the prior consent from the investor. All brokers, who do not have discretionary authority to trade an account, are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). Under the NASD Conduct Rule 2510(b), a broker is prohibited from trading in a non-discretionary customer account without prior written authorization from the customer. Unauthorized trading is a type of investment fraud because the Securities Exchange Commission (SEC) has found that disclosures of trades being made are essential and material to an investor. Unauthorized trading is often a gateway violation to other securities violations including churning, unsuitable investments, and excessive use of margin.