According to FINRA, Matthew Eric Platnico was fined $10,000 and suspended for nine months in all capacities for engaging in unauthorized and unsuitable trading in a customer account. Platnico was not required to pay restitution because the customer settled an arbitration claim with his member firm related to this conduct.

Platnico recommended a high-risk options trading strategy in a joint account held by a customer and her late husband. He communicated regularly with the customer's husband about the strategy. After the husband's death, Platnico spoke with the customer by telephone once but continued executing the trading strategy in the account without contacting the customer before placing options transactions and without having discretionary trading authority.

Although Platnico occasionally called the customer's son to discuss the options strategy, he never obtained written trading authorization from the customer for her son to direct trading in the account. Moreover, Platnico did not conduct reasonable diligence to confirm the options strategy continued to be suitable for the customer's investment profile after her husband's death.

The strategy was unsuitable given that it involved substantial risk of loss while the customer was retired, had limited investment knowledge and experience, and had only a moderate risk tolerance. Platnico placed at least 100 unsuitable and unauthorized options trades in the account, causing the customer to suffer substantial losses.

This case illustrates the critical importance of trading authorization and suitability obligations. When an account holder dies, registered representatives cannot simply continue trading strategies that were discussed with the deceased account holder. They must obtain proper authorization from the surviving account holder and reassess suitability based on that person's investment profile, knowledge, experience, and risk tolerance.

Options trading involves substantial risk and requires careful suitability analysis. Investors should understand the risks of options strategies and ensure their representatives have proper written authorization before placing trades. When family circumstances change, investment strategies should be reassessed to ensure continued appropriateness.