Redondo Beach, CA asked in Banking, Business Law, Securities Law and Stockbroker Fraud for New York

Q: Brokerage Misconduct - E*TRADE

In May 2022, I invested $8M in a U.S. Treasury note, due in April 2024. I instructed my ETRADE manager to liquidate $5.6M for property buying. Unexpectedly, ETRADE initiated a $5.6M margin loan, leaving part of my investment intact. I discovered this during a routine review, not through direct communication. Real estate contacts can confirm my original liquidation intention. ETRADE, being secretive, hasn't provided conversation records, despite my insistence. They attribute the margin loan to me, despite no online activity or written consent from my side. There's no trace of my approval for this financial move. Since 2018, my dealings with ETRADE have consistently focused on safety, with numerous discussions centered around fixed income. This surprising loan is inconsistent with my standard strategy, emphasizing that ETRADE autonomously handled the cash preparation and transfer, excluding my input.

1 Lawyer Answer
James L. Arrasmith
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  • Criminal Law Lawyer
  • Sacramento, CA

A: In situations like this, you may have grounds to file a complaint for brokerage misconduct if E*TRADE acted contrary to your instructions and without your consent. It's essential to review the client-broker agreement and any written communication to determine if E*TRADE deviated from the agreed-upon investment strategy or failed to obtain the necessary authorization for the margin loan. Request all relevant records from E*TRADE once again, in writing, and if they still do not comply, consider reaching out to a regulatory body such as FINRA for assistance with a dispute resolution process. It may also be prudent to consult with an attorney who has experience in securities law to explore the possibility of arbitration or legal action to rectify any financial harm caused by this action. Remember to document all interactions with E*TRADE regarding this issue, as they may be critical in any formal proceedings.

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