The Financial Industry Regulatory Authority (FINRA) has announced disciplinary action against Matt Ward (CRD #2075525), fining him $5,000 and suspending him from association with any FINRA member in all capacities for 15 business days. This action follows findings that Ward exercised discretion in customer accounts without obtaining the necessary written authorization.
Background and Findings Concerning Matt Ward
Matt Ward, a registered representative based in Los Angeles, California, consented to the sanctions without admitting or denying the findings. According to FINRA, Ward engaged in unauthorized discretionary trading in several customer accounts. Discretionary trading refers to the ability to make trading decisions on behalf of customers without prior approval for each trade.
Lack of Authorization
The findings revealed that Ward executed trades in customer accounts without first speaking to the customers on the day of the transactions. While Ward’s customers were aware that he was exercising discretion in their accounts, he did not have the required prior written authorization from any of them. Additionally, his member firm had not accepted any of the accounts as discretionary.
Regulatory Compliance
FINRA regulations require that registered representatives obtain written authorization from customers and that member firms formally accept the accounts as discretionary before exercising such control. These safeguards are in place to protect investors from unauthorized trading activities and to ensure transparency in account management.
Sanctions and Suspension
As a consequence of his actions, Matt Ward was fined $5,000 and suspended from association with any FINRA member for 15 business days. The suspension was in effect from March 4, 2024, through March 22, 2024. This disciplinary measure serves as a reminder of the importance of adhering to regulatory requirements and the potential consequences of non-compliance.
FINRA’s Role and Responsibilities
FINRA is committed to protecting investors and maintaining the integrity of the financial markets by regulating brokerage firms and their registered representatives. By imposing sanctions on individuals like Ward, FINRA emphasizes the necessity of compliance with established rules and the protection of investors’ interests.
Investor Awareness
This case highlights the need for investors to be aware of the management of their accounts and to ensure that their financial professionals are complying with all regulatory requirements. Investors should regularly review their account statements and communicate with their brokers to understand the nature of the transactions being conducted.
The disciplinary action against Matt Ward underscores FINRA’s dedication to enforcing regulatory standards and protecting investors from unauthorized activities. Ward’s failure to obtain written authorization for discretionary trading resulted in significant sanctions, highlighting the importance of compliance and investor protection in the financial industry.
What Is FINRA Arbitration?
FINRA arbitration is a dispute resolution process used to settle conflicts between investors, brokerage firms, and financial advisors outside of traditional court litigation. The process is administered by the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization responsible for overseeing broker-dealers and maintaining fairness in the U.S. securities industry. Because most brokerage agreements require customers to resolve disputes through arbitration rather than the court system, FINRA arbitration has become the primary method for resolving investor disputes in the United States.
At its core, FINRA arbitration is designed to be faster and less formal than a lawsuit. When an investor believes they have suffered financial losses due to misconduct—such as unsuitable investment recommendations, misrepresentation, excessive trading, or failure to supervise—they can file a claim with FINRA’s dispute resolution forum. Brokerage firms and registered representatives who are members of FINRA are generally required to participate in this process if a customer initiates arbitration.
The FINRA Process
The arbitration process begins when a claimant files a Statement of Claim with FINRA. This document outlines the facts of the dispute, the alleged misconduct, and the damages being requested. After the claim is filed, the respondent—typically the brokerage firm or broker—submits an Answer responding to the allegations. FINRA then appoints a panel of one or three arbitrators depending on the size of the claim. Arbitrators are neutral decision-makers selected from FINRA’s roster and may include individuals with industry experience as well as public arbitrators who have no ties to the securities industry.
Once the arbitration panel is selected, the case proceeds through several stages similar to litigation, including document exchange and pre-hearing conferences. However, arbitration is typically more streamlined than court proceedings. There are fewer procedural hurdles, discovery is more limited, and the process is generally designed to move more quickly than traditional litigation. Eventually, the case proceeds to an evidentiary hearing where both sides present testimony, documents, and arguments to the arbitrators.
At the conclusion of the hearing, the arbitration panel issues a written decision known as an award. This award determines whether the claimant is entitled to damages and, if so, how much compensation should be paid. Arbitration awards are generally final and binding, meaning they cannot easily be appealed. Courts may only overturn an arbitration award under very limited circumstances, such as evidence of fraud or arbitrator misconduct.
The Role of FINRA Arbitration in Dispute Resolution
FINRA arbitration plays a crucial role in the securities industry because it provides investors with a forum to pursue recovery for investment losses caused by broker misconduct. At the same time, brokerage firms benefit from a dispute resolution process that is often faster and less expensive than court litigation. While critics argue that mandatory arbitration clauses limit investors’ ability to pursue claims in court, supporters maintain that arbitration provides an efficient and accessible system for resolving financial disputes.
Ultimately, FINRA arbitration serves as the central mechanism for resolving conflicts between investors and the brokerage industry. By offering a structured yet streamlined process overseen by FINRA, arbitration aims to provide fair outcomes while maintaining confidence in the U.S. financial markets. Contact investment fraud lawyers at Bakhtiari & Harrison.
For more information on how to protect yourself from unauthorized trading and to check the background of a financial professional contact Bakhtiari & Harrison.