Trading, Accounts & Prohibited ActsQuestion 260 of 398
Without any written discretionary authority and without calling the client, a representative buys 1,000 shares of a stock in the client's account because he is sure it will rise. What violation is this?
a.Unauthorized trading
b.A legitimate 'not-held' order
c.Front-running
d.Proper use of discretion
Explanation
Executing a trade in a customer's account without the customer's authorization (and without valid written discretionary authority) is unauthorized trading, a violation of just-and-equitable-principles standards, regardless of whether the trade turns out well.
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