The Financial Industry Regulatory Authority (FINRA) recently announced Joel David Davidman (Davidman) entered into a Letter of Acceptance, Waiver and Consent without admitting or denying the allegations against him. The settlement concerns allegations Davidman exercised discretion in his customers’ accounts without written authorization. As a result, Davidman was suspended from the financial industry for forty-five business days and ordered to pay a $5,000 fine.

Davidman (FINRA CRD No. 861180) is an associated person registered with FINRA since 1981. From 1981 through 2015, and during the relevant time period, Davidman worked for Morgan Stanley. Davidman currently works for Stifel, Nicolaus & Company, Incorporated.

FINRA’s Department of Enforcement investigated Davidman’s alleged misconduct and found he exercised discretion and unauthorized trades on approximately 2,200 occasions in 27 customer accounts. According to FINRA, Davidman’s customers neither provided written authorization for his discretionary trading, and nor did Morgan Stanley approve the accounts for discretionary trading.

Based upon the foregoing misconduct, FINRA alleged Davidman violated NASD Rule 2510(b), as well as FINRA Rule 2010. For example, NASD Rule 2510 prohibits a registered representative from exercising any discretionary authority in a customer’s account unless such customer has provided prior written authorization and the account has been accepted by a FINRA member. In cases where a financial advisor executes unauthorized trades without proper authorization, the financial advisor and brokerage firm may be found liable for investment damage, as well as disciplined by securities regulators such as the case here.

Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.