Finding trades in your brokerage account that you never authorized can feel surreal. One moment you are checking a statement or logging into an app, and the next you are staring at positions, losses, or margin activity that make no sense. In general terms, unauthorized trading can involve a broker placing trades without permission, someone using account access they were not entitled to use, or a firm allowing activity that does not match the authority on the account.
If that is where you are right now, the first question is usually simple: what happens next? The answer often depends on the source of the trades, the account paperwork, the timing of your response, and the records available to prove what was and was not approved.
In this post you’ll learn what unauthorized trades often look like, what steps investors commonly take after discovering them, how FINRA arbitration fits in, what evidence can matter, and when an attorney may help evaluate possible recovery options. For a broader explanation of the issue itself, it may help to start with this overview of how unauthorized trading claims are typically framed, including account control and damages.
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At a basic level, FINRA describes prohibited conduct to include purchasing or selling securities in a customer’s account without first contacting the customer and receiving authorization, unless the broker had written discretionary authority or limited time-and-price discretion for that order. FINRA’s prohibited conduct guidance and FINRA Rule 3260 on discretionary accounts are useful starting points here.
That matters because many investors are told, after the fact, that the broker was “just managing things,” “reacting to the market,” or “acting in your best interest.” In legal terms, that explanation may or may not resolve the issue. A registered representative generally cannot exercise discretionary power in a customer account unless the customer gave prior written authorization to a stated person and the firm accepted the account in writing. FINRA Rule 3260 lays that out directly. There is a narrow exception for time-and-price discretion, but FINRA states that this typically lasts only until the end of the business day unless there is a specific written indication otherwise. FINRA Rule 3260; FINRA Notice 04-71.
In other words, not every surprise trade is automatically unlawful, but “I did not expect this trade” and “I never gave permission for this trade” are two very different things. An attorney might help determine whether the facts point to unauthorized trading, unsuitable recommendations, churning, account takeover, failure to supervise, or some combination of those claims.
A lot of brokerage disputes are shaped by the paper trail created in the first few days. FINRA tells investors that if they lost money or there was an unauthorized trade in the account, they can complain in writing to the firm and keep copies of all related correspondence. FINRA also says investors can begin by contacting the broker, branch manager, or compliance department. FINRA’s complaint guidance.
SIPC gives similar investor-protection guidance: brokers are expected to issue confirmations and account statements, and if an investor discovers an error in either one, the issue can be brought to the brokerage firm’s attention in writing. SIPC’s fraud-protection page.
In practical terms, investors often start by preserving: