South Florida Broker Fined, Suspended for Improper Exercising Discretion in Non-Discretionary Customer Trading Account
Gustavo Rodrigo III (CRD #3031284) is an actively registered broker. Currently, Mr. Rodrigo serves as a registered representative of Sutter Securities Incorporated and Boustead Securities, LLC. Recently, this broker was fined $2,500 and served a 10 business day suspension for exercising trading discretion in a customer’s non-discretionary trading account. Here, our Miami securities broker fraud lawyer provides a comprehensive overview of the allegations raised and the enforcement action taken in this case.
FINRA Enforcement Action: Former Westpark Capital Representative Gustavo Rodrigo III
FINRA determined that Gustavo Rodrigo III exercised trading discretion in the non-discretionary account of a customer between early 2019 and late 2020. Mr. Rodrigo III did not have express written authorization to make the trades in question.
The alleged violation occurred while Mr. Rodrigo III was a representative of Westpark Capital in Boca Raton, Florida. According to FINRA, 98 “unauthorized” trades were made. Mr. Rodrigo III left Westpark Capital in January of 2021.
Without admitting or denying any of the specific allegations raised by FINRA, Sutter Securities and Boustead Securities representative Gustavo Rodrigo III consented to the proposed penalties. He served his ten business day suspension in early October of 2023.
Understanding Securities Industry Regulations Regarding Discretionary Trading Accounts
FINRA has rules and regulations for discretionary trading accounts. With this type of account, a broker can make a trade on behalf of a customer without express written authorization. In other words, they can exercise discretion. To qualify as a discretionary account, there must be clear written authorization defining the scope of the representative’s trading authority. Brokers must also adhere to the “suitability rule,” ensuring that every trade aligns with the client’s investment goals.
In contrast, non-discretionary accounts require brokers to obtain specific approval from the client before executing any trade. There must be clear communication and record-keeping for each transaction. A broker cannot exercise any trading discretion within a non-discretionary account. If there is no written authorization granting a representative the right to make trades on their own, then they must get approval for each individual transaction.
A Broker or Brokerage Firm May Be Liable for Losses Caused By Unauthorized Trading
When a broker executes trades without the client’s explicit consent in a non-discretionary account, it constitutes unauthorized trading, a serious breach of industry rules and client trust. Clients may not only suffer financial losses but also face excessive fees and misaligned investment strategies. In these cases, the brokerage firm may be held liable for failing to supervise its brokers adequately. Brokerage firms are expected to have robust monitoring systems to detect and prevent unauthorized trading—including the unapproved exercise of trading discretion.
Contact Our Miami Unauthorized Trading Attorney Today
At Carlson & Associates, P.A., our Florida unauthorized trading lawyers are standing by, ready to protect your rights and interests. If you or your loved one sustained losses as a consequence of a financial advisor improperly exercising trading authority in a non-discretionary account, we can help. Contact us at our Miami law office now for your confidential case review.
Source:
brokercheck.finra.org/individual/summary/3031284