Does a finicianl advisior have the right to sell stock provided by the POA without the owner being informed?

Question

My sister who was POA of my mother sold a large amont of her Exxon stock without my mothers knowledge. The advisior never informed my mother of the details or any information of the transaction and never saw the POA papers. My mother is very competant and is now facing huge tax problems. She never knew what the stock sold for or what the investment plans were. At 68 she was doing fine with a monthly divided check. She lost money because of a financil advisior talked to my sister. Is he not partly responsible for advising to sell something that just increased in value? Wasn't he suposed to see my mother and explain his plan? Is he just stupid of money hungry?

Answer 1

If your sister is officially listed as a POA on the account she can place buy orders, sell orders and get information about the account. She can not remove assets from the account. POA's are used on accounts for perfectly competent people so that someone with more investment experience can help them. If your sister is officially listed as a POA on the account the financial advisor is required to accept orders from that person just as if it were from the account owner. The financial advisor is not required to inform the owner prior to placing the trade. The only time that a financial advisor could be justified in not accepting an order from a registered POA would be if for some reason he suspected some kind of fraudlulent activity. In your circumstance, if your sister is officially listed as a POA on the account and she authorized the trade you are out of luck. You can go back in and buy the stock again if you would like. One thing that I don't understand about your question is that in one sentence you say that your mother faces huge tax problems and in another sentence you say that she lost money. Those two things cannot happen. If she lost money by the selling of the stock she will not have to pay taxes. In fact she can use the loss to offset any capital gains that she might have elsewhere. I don't mean to point fingers but if your sister is officially appointed as a POA on the account your sister is responsible for this not the financial advisor. At the company that I work we have issues like this pop up all the time. It is unfortunate but it is one of the risks of having a POA on the account. I hope that this was helpful. Good luck.

Answer 2

If your sister has a power of attorney, then it is she, not the financial advisor, who is responsible. The broker is obligated to follow her instructions, provided he has the poa (how do you know that he doesn't have a copy?). Talk to your sister, she may have had a good reason for the sale, perhaps to gain more diversification in the account.

Answer 3

I think as long as she's POA, she can do this. Do you have a lawyer you could ask? Absolutely the advisor should have waited to have the documentation PRIOR to taking any trade instructions from a person that isn't registered on the account. Have you talked to the advisor and voiced your concerns?

Answer 4

Tell your mom just fire the stupid financial advisor, he should act on your mom behalf. close the account and find some ohther one that is able to help your mom with her best interested