FINRA Bars Broker James Dunn After Multiple Allegations Of Unauthorized Trading

James William Dunn, Jr. (CRD#: 6084258) is a former registered broker and investment advisor whose last known employer was Ameriprise Financial Services, LLC (CRD#:6363) of Vienna, VA. He was previously employed with Wells Fargo Clearing Services, LLC (CRD#:19616) of Arlington, VA, and Morgan Stanley (CRD#:149777) of McLean, VA. He has been in the industry since 2012.

In Dunn’s 10-year career, he has a total of 25 disclosures in his FINRA record. One of those disclosures is his most recent discharge from Ameriprise, filed on 10/19/2021. According to his entry in BrokerCheck, James Dunn voluntarily resigned “while under review for potential violation of company policy related to suitability, unauthorized trades and texting with clients.”

After reviewing the Form U5 Ameriprise submitted following his termination, FINRA contacted Dunn to request related documents and information. Three months later, Dunn’s legal counsel responded by email that he would not comply with the request at any time. Even though Dunn was no longer employed by a broker dealer, he is still subject to FINRA’s jurisdiction. Therefore, the refusal violated FINRA Rules 8210 and 2010.

FINRA issued a Letter of Acceptance, Waiver & Consent (AWC) signed by Dunn and his legal counsel and accepted by FINRA. In it, Dunn accepted the sanction of a permanent bar from any FINRA broker dealer in any capacity, effective 8/17/2022.

Just two years prior to his discharge from Ameriprise, Dunn was terminated by Wells Fargo Clearing Services, LLC on 5/15/2019 because of “concerns regarding mutual fund trades that were marked unsolicited at the time the trades were entered.” This termination is the first disclosure in his CRD.

James Dunn Customer Disputes

One of Dunn’s customer dispute disclosures is still pending. Of the 22 disputes, 21 have been settled with millions of dollars involved. The remaining dispute was filed on 3/2/2022, with requested damages of $677,588.86. In it, the client alleges that Dunn purchased equity securities in their account without authorization.

All the customer disputes indicate that Dunn habitually purchased securities and customer accounts without the customer’s specific written authorization. Some were inappropriate for the customers’ investment objectives, a few lost money, two involved foreign securities, and still others were equity securities.

Trading Without Authorization

Brokers are required to have specific written authorization from each of their clients that allows them to make trades in certain client accounts.

Brokers like James Dunn have many times made trades in clients’ accounts without obtaining the customer’s written authorization. FINRA’s Rule 3260 specifically prohibits brokers from making trades of any kind in a client’s account without their written permission. This called a “non-discretionary account.” Any trades made without first obtaining a client’s permission is known as “unauthorized trading.” It is also a breach of fiduciary duty.

Some brokers make the trade and then get authorization after the trade is completed. This is not allowed by FINRA and is still considered unauthorized trading. But chances are the investor would not discover that trade immediately, and so would not file a complaint until later. But a delay in filing the complaint about an unauthorized transaction can indicate approval for the brokers trading. Not filing a complaint immediately may make it more difficult to prove that the transaction was indeed unauthorized.

Investors have a duty to examine their statements frequently and regularly. Online access makes this step much easier. If you wait for a statement, that can be as many as 30 days before the trade is discovered.

A discretionary account allows brokers to make trades without contacting the investor first. But brokers are only allowed to make trades that are in the best interest of the investor.

Texting Your Broker

Another of Dunn’s transgressions was communicating by text with his clients. With so many people using text messages for short conversations, most people would find it unusual that brokers don’t send text messages. But there’s a good reason why.

Because of the transitory nature of texting, it’s not a good communications medium for securities transactions. Most firms have rules that prohibit brokers and other employees for sending text messages to clients, as well as accepting text messages for trading and other client transactions. Broker dealers are required to keep permanent records for compliance. Therefore, texting doesn’t fit that requirement. Emails, letters, and recorded phone calls on secured lines keep track of conversations and interactions with clients.

Furthermore, with so many texting scams around, and texts that come from unfamiliar places, how do you know that text is actually from your broker? With both online and offline scams, the last thing you want to find out is that that text message was not from your broker or brokerage firm. Instead, you may have responded to a text from someone who’s looking to steal your identity, your financial information, and ultimately, your money. Scam texts can come from anywhere and look legitimate. If you respond to someone you assume is your broker, you could find yourself losing a considerable amount of money. The Federal Trade Commission offers additional information on text messages that are not legitimate.

Did You Invest With James Dunn?

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.