According to FINRA, Dominic Joseph Carlo was fined $2,500 and suspended from association with any FINRA member for 10 business days for exercising discretion with respect to transactions involving customers without prior written authorization from the customers and without his member firm having accepted the accounts as discretionary.

The customers had given Carlo oral or implicit authorization for the transactions; however, none provided prior written authorization. Discretionary authority allows representatives to decide which securities to buy or sell and the amount without consulting the customer for each transaction. Written authorization is required to protect customers from unauthorized trading and ensure they understand the scope of authority granted.

Carlo also completed and submitted compliance questionnaires to the firm that inaccurately stated that he had not exercised discretionary authority in customer accounts. This false attestation is a separate violation that demonstrates a lack of candor with his firm.

Investors should understand that granting discretionary authority is a significant decision that should only be done in writing after careful consideration. Representatives who exercise discretion without proper authorization violate customer trust and regulatory requirements.