When a broker executes a trade in your account without your prior consent or contractual agreement, he may be liable for losses that you suffered. If you maintain a non-discretionary account – which is the most common type of brokerage account and which requires a customer’s consent prior to the execution of each and every trade – your broker must confer with you prior to each trade and obtain your informed consent. 

If you maintain a discretionary account, which is one that permits a broker/brokerage firm to trade in your account without seeking your prior approval, the broker and the firms must trade the account in accordance with parameters that may have been established.  In addition, brokers/brokerage firms have a duty to monitor discretionary accounts so as to alert customers of risks or developments pertinent to the account goals. The existence of a non-discretionary account does not entitle the broker/firm to trade in ways that exceed the contractual authority.   

In limited circumstances involving margin accounts, a firm can liquidate securities positions to meet a “maintenance margin call” or an “exchange margin call”. While such instances may not give rise to unauthorized trading violations, they may show evidence of other violations that resulted in margin deficiencies. An experienced securities attorney can help analyze whether such other violations exist.

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