Former Wells Fargo Financial Advisors stockbroker John Michael Cruse has been fined $5,000 and suspended for 10 business days. Cruse, who worked out of a Petaluma, California office, agreed to FINRA’s findings that he had exercised trading discretion in customer accounts against firm policy. This is a fairly typical form of stockbroker misconduct. Cruse and another broker executed a trading model in customer accounts and made trades without first speaking to the customers. FINRA also found that Cruse improperly made trades in a customer’s account the day after the customer died. When a broker makes discretionary trades, the broker makes the trades without discussing the trades with the customer. But as a general matter, brokers must obtain written authorization from a customer before exercising trading discretion in a customer’s account. Moreover, many brokerage firms prohibit brokers from using discretionary trading authority. Investors should carefully review their trade confirmations and monthly account statements to make sure that they authorized all trades in their accounts.
