Unauthorized Spousal IRA Withdrawals: A Growing Trend?

An Indiana Financial Industry Regulatory Authority (FINRA) arbitration panel recently ruled against Merrill Lynch, Pierce, Fenner & Smith, Inc., awarding an investor more than $2.5 million for his claim involving unauthorized withdrawals and transactions from his Merrill Lynch IRA account. The panel also held Merrill Lynch responsible for $7,200 in fees and costs associated with the arbitration hearings.

Maddox Hargett and Caruso, P.C. provided legal representation to the investor who brought the claim against Merrill Lynch.

The claim and the award shed new light on the responsibilities that brokers and investment firms owe to their clients – and what can happen if those supervisory duties are breached or neglected.

Stockbrokers and investment firms are bound by federal and state laws to uphold a fiduciary duty to their clients. This fiduciary duty requires a stockbroker to put the investing interests of clients before his own and to provide full disclosure about the investments and financial products that are recommended.

Investment firms also have a duty to uphold their supervisory responsibilities. Specifically, every brokerage firm has a duty to supervise the brokers who are licensed by that firm.  If unauthorized transactions or withdrawals are made from a client’s account, the investment firm and the broker overseeing the account could be in violation of their supervisory duties.

If a stockbroker fails to abide by this criterion and makes unsuitable trades without your prior consent or authorization, you could have a possible claim for unauthorized trading. For a free initial consultation regarding your securities claim, complete this contact form.