The Risk Alert states that although broker-dealers and investment advisers are subject to different regulatory requirements, both face similar risks of financial and reputational losses arising from unauthorized trading. The note continues to advise that changes in trading patterns, a high volume of trade cancellations or corrections, manual trade adjustments, or unexplained profits for a particular trader or client may warrant additional scrutiny. Stress testing and independent trading reviews are offered as protective compliance measures.
The alert is intended to help firms prevent and detect unauthorized trading in brokerage and advisory accounts.
SEC Releases Risk Alert on Unauthorized Trading
