Unauthorized trading is a form of stockbroker fraud or misconduct. Unless you have signed discretionary papers giving your broker permission to trade your account without your authorization, your broker is required to obtain your permission before buying or selling securities in your account.

Many unscrupulous brokers place transactions in customer accounts without authorization, and when the client calls to complain, they may convince you to retain the shares because they have increased in value, or will increase in value. Sometimes, this activity may be also blamed on a "computer error." In either event, if your broker has entered unauthorized transactions in your account, chances are you have fallen prey to other fraudulent devices by this person.

If you have been the victim of unauthorized trading, take action. The failure to act may be deemed tacit approval of these acts, and you cannot be said to have complained later, knowing that you own a particular security, when its price goes down.