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Christopher Michael Bones, David Shelton Brown, Jr. Fined & Suspended in Separate Instances of Unauthorized Discretionary Trading

FINRA suspended broker Christopher Michael Bones and fined him $5,000 for allegedly placing trades in customer accounts without notifying customers and in violation of firm policy.

FINRA Case #2010025372001

Investigators discovered that while associated with Ameriprise Financial Services, Inc., Bones employed discretion in several customer accounts without prior notification, authorization or acceptance from Ameriprise. The investigation also charged Bones with failure to notify customers before executing several of these trades.

FINRA cited Ameriprise Financial's policies, which prohibit its brokers and general securities representatives from exercising discretionary power in any firm customer's account.

According to the investigation, Bones knew of this policy before effecting his discretionary transactions.

In an unrelated case, registered principal David Shelton Brown, Jr. was suspended and fined $5,000 for allegedly exercising discretion in a customer's non-discretionary Exchange Traded Funds (ETF) account without his firm's prior written authorization.

FINRA Case #20110279039

FINRA determined that while Brown was employed by Sagepoint Financial, Inc., he performed 10 discretionary trades in an ETF account without prior written authorization from neither his customer nor Sagepoint.

While the trading activity proved profitable, FINRA found that Brown earned commissions totaling $2,891 in violation of firm policy. Sagepoint policy at the time specified that commission-based brokerage accounts could not be traded on a discretionary basis.

Following a complaint from Brown's customer, Sagepoint settled for $6,245.69 and terminated Brown's employment.

According to FINRA/NASD rules, in order for a registered person such as a broker to employ discretion in a customer's account, that person must first secure written authorization from the investor. Furthermore, all firm associates and employees are bound by their respective firm's policies and procedures.

Many securities industry firms, like Ameriprise, prohibit the use of discretion in client accounts. Others, like Sagepoint, prohibit discretionary trading in certain types of accounts.

Before opening an account, it is important to research whether or not your investment firm possesses such a policy and, if not, procedures that must be followed in order to authorize the practice.

If you have invested with Christopher Michael Bones, David Shelton Brown, Jr. or any financial professional who has exercised discretionary power in violation of firm or industry policy, or who has failed to notify you in advance of placing a trade in your account, and such misconduct has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
Located at 12711 Ventura Boulevard, Suite #440 Studio City, CA 91604. View Map
Phone: (800) 699-1881 | Local Phone: (818) 760-9880.
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