According to FINRA, Charles Henry Garrido was fined $10,000 and suspended from association with any FINRA member in all capacities for three months for exercising discretion without written authorization in approximately 2,500 trades across over 200 customer accounts and for conducting business communications via text messages that were not retained by his firm.

Garrido exercised discretion in customer accounts without obtaining the required written authorization. While the customers understood that Garrido was conducting trading in their accounts, none had given him prior written authorization, and his member firm had not accepted the accounts as discretionary. FINRA rules and securities regulations require that before a representative can exercise discretion, the customer must provide written authorization, and a firm principal must accept the account as discretionary.

The scope of Garrido's unauthorized discretionary trading was substantial: approximately 2,500 trades across more than 200 customer accounts. This extensive pattern of unauthorized discretion demonstrates a systemic failure to comply with basic regulatory requirements rather than an isolated incident.

Compounding the discretionary trading violations, Garrido falsely attested on each of his firm's annual compliance questionnaires that he did not exercise discretion in customer accounts. These false attestations meant the firm had no reason to suspect that Garrido was trading on a discretionary basis without proper authorization. The false compliance certifications also constitute a separate violation involving dishonesty.

Beyond the unauthorized discretion, Garrido sent text messages related to his securities business that were not retained by his firm. These text messages included investment recommendations, information about specific trades, brokerage account performance and balances, transfers of funds, issuers, and market events—all communications that firms are required to capture and maintain as part of their books and records.

Garrido did not provide copies of these text messages to the firm, which caused his firm to maintain incomplete records of business communications. Books and records requirements mandate that broker-dealers capture and preserve all business-related communications. These records are essential for regulatory examinations, supervision of representative activities, and resolution of customer disputes.

The use of text messages for business communications has become a significant compliance issue across the securities industry. While text messaging can facilitate quick communication with customers, it creates substantial record-keeping challenges. Representatives who use personal phones for business texts often fail to capture these communications in firm systems. Major firms have paid hundreds of millions of dollars in fines to the SEC and CFTC for widespread use of off-channel communications by employees.

The suspension is in effect from January 20, 2026, through April 19, 2026. During this three-month period, Garrido cannot function in any registered capacity.

For investors, this case highlights two important issues. First, understand what authority you have granted to your financial professional. Discretionary authority should only be granted through proper written authorization. Second, be aware that business communications should occur through firm-approved channels that can be supervised and retained as required by regulations.