According to FINRA, registered representative Christopher Joseph McCoy (CRD #4113108) of Fairfield, Connecticut, was sanctioned with a deferred fine of $5,000 and suspended for one month from associating with any FINRA member firm in all capacities. This action was resolved through an Acceptance, Waiver, and Consent (AWC) agreement effective April 16, 2024, under FINRA Case #2020067072101.
McCoy was found in violation of FINRA rules after he exercised discretion in customer accounts without obtaining the required written authorization from the customers or permission from his member firm. Several of the affected customers were senior investors, a population that regulators have identified as particularly vulnerable to potential abuse in the securities industry. Discretionary trading authority allows a broker to make investment decisions — including what to buy or sell, how much, and when — without obtaining the customer's prior approval for each individual transaction. Because this authority gives the broker significant control over a customer's assets, FINRA rules require that it be granted only through formal written authorization and accepted by the firm.
Compounding this violation, McCoy falsely attested in compliance questionnaires that he had not exercised discretionary trading authority in any customer accounts. These internal compliance certifications are a key tool that firms use to monitor their representatives' activities and ensure adherence to regulatory requirements. By providing false information in these questionnaires, McCoy undermined his firm's compliance oversight and concealed his unauthorized activities from supervisory review.
The exercise of unauthorized discretion is a serious regulatory concern because it removes the customer from the decision-making process regarding their own investments. Without proper authorization and firm oversight, there is an elevated risk that trades may not align with the customer's investment objectives, risk tolerance, or financial situation. When senior investors are involved, these concerns are amplified due to factors such as fixed income dependency, shorter investment time horizons, and potential cognitive vulnerabilities.
For investors, this case is a reminder to carefully review all account agreements and understand what authority they have granted their broker. Customers who have not signed a written discretionary authorization should expect to be consulted before any trades are executed in their accounts. If a customer notices trades they did not authorize, they should promptly contact their firm and consider reporting the matter to FINRA.
