If an unlicensed employee makes a bad trade in an account and the client loses $500 because of it, who pays? Legally, can the rep make the unlicensed person pay the $500? Where can I find the laws that deal with this sort of situation?
2006-08-10 06:27:21 · 6 answers · asked by babyblue 2 in Business & Finance ➔ Investing
Your question is to vague and the NASD rules and regulations are way to complex for anyone to give you an answer to your question. When you say an unlicensed employee made a bad trade there are so many different scenarios that I have seen over the years:
- The rep bought a security when they were suppose to sell
- The rep bought or sold the wrong security
- The rep bought or sold the wrong number of shares
All of these trade errors would be treated differently so clarification from you would be necessary.
The part about an "unlicensed" employee made the trade sounds funny also because the NASD is quite clear that only licensed brokers can place trades. Are you certain that this person actually placed the trade for you or is it possible that they simply took your instructions and passed it to the licensed broker? If what you said is true than that is an NASD violation in and of itself. Google NASD regulations and you will find a link to the National Association of Securities Dealers website. They are the governing body for the brokerage industry.
The final thing that I would point out is that just because you lost money doesn't necessarily mean that this was a "bad trade". I've been a stockbroker/financial advisor for 15 years. I've also worked in the compliance department for Charles Schwab and 95% of the time when a customer claimed that an employee made a mistake on their account, investigations showed that no misconduct took place. Add a few more details or email me directly if you would like any additional information on your situation. Good luck
2006-08-10 07:28:46 · answer #1 · answered by Gator714 3 · 0⤊ 0⤋
Ultimately, the firm where you hold your account is liable for you loss. It is then up to that firm to discipline the unlicensed employee as well as your registered rep (broker).
Talk to a securities attorney or more likely just talk to that firm's compliance officer and ask for restitution.
2006-08-10 06:49:06 · answer #2 · answered by Anonymous · 1⤊ 0⤋
I assume you are referring to an unlicensed broker, if that is the case then the company he works for is liable the employee. If it is just a person that you know who is freelancing then nobody collects.
2006-08-10 06:34:18 · answer #3 · answered by amglo1 4 · 0⤊ 0⤋
i would think that the unlicensed employee and the rep are liable. the client needs to be reimbursed for their loses.
2006-08-10 06:37:02 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Unfortunately, in business practices, the wording of the contract you signed with the company would weigh far too heavily on the legality of what was done, for anyone to give you an honestly solid answer to this question.
2006-08-10 06:34:55 · answer #5 · answered by baldninja2004 2 · 0⤊ 0⤋
I think the rep should pay.
2006-08-10 06:32:50 · answer #6 · answered by Anonymous · 0⤊ 0⤋