Did You Know?
There are over 24 million business entities filing income tax returns (a number that is growing about 2% annually), but nearly 60% reported annual receipts of less than $25,000.
If you have lost money due to a Failure to Execute Order (including online trading errors) or trades that you did not authorize on your account, your broker and your broker's firm may be liable. Brokers are obligated to execute their client's orders in a timely fashion. In some instances brokers delay selling and buying stocks despite the wishes of their clients and in other instances simply refuse to execute the order.
In order for brokers to legally and properly trade on a client's account, they must have previously been granted "discretion", or power of attorney, on that account directly by the client. Without such authorization an account is considered "non-discretionary" also the client must approve each trade before the trade can take place. Some brokers have been known to execute trades without the consent of the client.
If this occurs it is possible the broker may have an ulterior motive. For instance, if a broker is trying to inflate the value of a stock as part of an unethical investment scheme, it may be against his interests to sell the stock. The goal in many unethical investment schemes is to manipulate the value of a stock upward so that it appears as if the stock is "hot", than to advise "preferred costumers" to sell, allowing the stock to collapse on unsuspecting investors who are not in the "loop".
Online Trading Errors
On-line trading is conducted with a high level of trust in computerized systems and technologies that are often only a few years old.
The following are some problems with online trading:
• Inexperienced investors: occasionally clients get in over their head and conduct trades that are out side their financial ability to handle.
• Unreasonably priced trades. Sometimes trades are executed at unreasonably high prices.
• Technical problems. In some instances, general computing errors occur and trades are misplaced. In other instances the on line brokerage firm lacks the infrastructure to handle large numbers of orders on a heavy trading day, the servers are overwhelmed and a trader is unable to trade.
Unauthorized Trading and Failure to Execute an Order can result in claims for rescission, breach of contract, or fraud, depending on the facts. If you have lost money due to trades that you did not authorize on your account, your broker and your broker's firm may be liable.
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