According to FINRA, Robert James McNamara was fined $5,000 and suspended for 30 business days on January 21, 2022, for exercising discretion in customer accounts without proper authorization.

McNamara exercised discretion in customer accounts without obtaining the customers' written authorization and without his member firm approving the accounts for discretionary trading. This violation is particularly concerning because McNamara effected the discretionary trades after a prior AWC was issued for the same type of violation (exercising discretion without authorization), but before his suspension for that prior violation began.

This pattern of conduct - committing the same violation again after being sanctioned but before serving the suspension - demonstrates a troubling disregard for regulatory obligations and past disciplinary actions. It suggests that McNamara did not take the prior AWC seriously or modify his conduct in response to regulatory discipline.

Discretionary authority allows brokers to make investment decisions in customer accounts without obtaining approval before each trade. Because this authority gives brokers significant control, FINRA requires written authorization from customers and written acceptance by the firm. These requirements protect investors by creating clear documentation of discretionary authority and triggering enhanced supervisory procedures.

When brokers exercise discretion without proper authorization, they circumvent important investor protections. Even when customers trust their broker and are satisfied with the trading decisions, the written authorization requirement serves critical functions: documenting the scope of authority granted, ensuring customers understand they are giving discretionary authority, and triggering firm supervisory obligations.

McNamara's recidivism - committing the same violation shortly after being disciplined for it - is an aggravating factor that justified enhanced sanctions. Representatives who repeat violations demonstrate that standard sanctions are insufficient to modify their conduct.

For investors, this case illustrates the importance of understanding whether your account is discretionary or non-discretionary. If you want your broker to make investment decisions without consulting you first, ensure you provide written authorization and your firm accepts the account as discretionary. If you have not provided written discretionary authorization, your broker should contact you before making trades.