As recently reported, a broker formerly affiliated with J.P. Morgan Securities LLC (JP Morgan), Lauren L. Wing (Wing, CRD# 5803987), was suspended by the Financial Industry Regulatory Authority (FINRA) and terminated from JP Morgan in connection with allegations of unauthorized trading in a senior customer’s account. As set forth in a Letter of Acceptance, Waiver and Consent (AWC) – in which Wing neither admitted nor denied FINRA’s findings – FINRA determined that Wing “executed two trades in the account of a customer without first obtaining his authorization, thereby violating FINRA Rule 2010.”

According to the AWC, in January 2019, Wing allegedly “purchased two brokered Certificates of Deposit in a senior customer’s brokerage account totaling $314,000 without first obtaining the customer’s authorization.” (A brokered certificate of deposit is purchased through a brokerage firm or a sales representative, rather than directly through a bank. The product is initiated by a bank, however, and the brokerage receives a sales incentive.) The customer reportedly complained to Wing shortly thereafter, and the written complaint was forwarded by Wing to her managers. In response, JP Morgan “reversed the trades, reimbursed the $135 trading loss, and terminated Wing.” Subsequently, FINRA began its investigation into the matter after JP Morgan filed a Form U5 around April 2019 related to Wing’s termination.

Wing entered the securities industry in 2012. According to FINRA BrokerCheck, Wing worked as a broker at Merrill Lynch in Santa Monica, California from 2012 to 2016 and at TD Ameritrade in Beverly Hills from 2016 to 2017. Her most recent position was at JP Morgan in the firm’s Los Angeles office from January 2018 to April 2019. Prior to the allegations at hand, Wing had no reported disclosures.

Pursuant to FINRA Rule 2010, brokers are required to “observe high standards of commercial honor and just and equitable principles of trade.” According to BrokerCheck, Wing “admitted to exercising discretion when placing trades on behalf of a customer without prior authorization.” Consequently, Wing consented to FINRA Enforcement’s sanctions “and to the entry of findings that she engaged in unauthorized trading,” which is a violation of Rule 2010, as well as a violation of FINRA Rule 2510(b), in instances where a customer has not granted his or her broker discretion over the account. Wing received a one-month suspension, ending in October 2020, and was fined $5,000.

Unauthorized trading occurs where a broker sells, buys, or exchanges securities without the prior consent of a customer. Unless a customer has given the broker discretion to conduct trades in an account without prior consent, the broker must first discuss all trades with his or her client before executing any such trades. Furthermore, under FINRA Rule 3110, brokerage firms like JP Morgan must establish and maintain a reasonably designed system to supervise brokers’ activities and ensure their compliance with FINRA rules, as well as applicable state and federal securities laws. In instances where a customer suffers losses due to a broker’s negligent or impermissible actions, then the brokerage firm may well also be held liable for failure to supervise its employee.

The attorneys at Giarrusso Law Group LLC have considerable experience in working closely with investors to resolve all manner of issues concerning investment losses, including losses suffered due to negligence or misconduct by a financial advisor. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us at (201) 771-1115 or info@gialawgroup.com for a no-cost, confidential consultation.