According to FINRA, Christopher John Shaw was fined $5,000 and suspended for 15 business days in all capacities for exercising discretion to execute trades in customer accounts without written authorization from customers or his firm's acceptance to trade the accounts on a discretionary basis.

Shaw mistakenly believed he had discretionary authority for the accounts. However, his firm did not permit the use of discretion in its brokerage accounts, meaning no accounts at the firm could be traded on a discretionary basis regardless of customer authorization.

Discretionary authority allows a representative to make investment decisions for a customer without obtaining the customer's prior approval for each specific transaction. This authority requires written customer authorization and firm acceptance because it gives the representative significant control over the customer's account and assets.

Trading customer accounts without proper discretionary authorization violates customers' right to approve transactions in their accounts. Even when a representative believes they have authority and acts in good faith, executing unauthorized discretionary trades deprives customers of control over their investments and can result in unsuitable or unwanted transactions.

Investors should be aware that discretionary authority should only be granted carefully, with clear written agreements specifying the scope and limitations of the authority. They should regularly review account activity to ensure it aligns with their expectations and approved authority.

The 15-business-day suspension holds Shaw accountable for exercising discretion without proper authorization, while recognizing his mistaken belief that he had authority. This case reinforces that representatives must verify they have proper authorization before exercising any discretionary authority.