John Forster, a broker registered with San Blas Securities in Atlanta, Georgia, has been accused of making unauthorized trades in a recent investor dispute. Haselkorn and Thibaut is currently investigating Mr. Forster for similar misconduct. The pending dispute, filed in December 2024, alleges that he failed to act in the customer’s best interest and made unauthorized options trades. The claimants are collectively seeking at least $700,000 in damages.
Unauthorized trading occurs when a broker buys or sells securities in a customer’s account without obtaining their consent beforehand. This is a serious violation of FINRA rules and may result in significant losses for the investor. Clients trust their financial advisors to make prudent decisions aligned with their investment objectives and risk tolerance. When a broker disregards this trust and acts without authorization, it can have devastating financial consequences.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” Investors rely on their brokers’ expertise and expect them to explain the risks and benefits of any recommended transactions. Making trades without a client’s knowledge or consent exposes them to unknown risks and potential losses.
According to a 2019 FINRA study, improper and unauthorized trading was one of the most common investor complaints, accounting for nearly 10% of all disputes filed that year. Forbes also reports that investment fraud and bad advice from financial advisors are among the top reasons why investors lose money.
Financial advisor’s background, broker dealer, and past complaints
John Forster has been a registered broker since 1984, working at various firms including E.F. Hutton & Company, Lehman Brothers, Citigroup, Morgan Stanley, and most recently, Merrill Lynch. Merrill Lynch disclosed terminating Mr. Forster in November 2024 over allegations that he entered unauthorized orders in non-discretionary accounts and mismarked trades. He defended these accusations, claiming the clients had approved the trades but were not on the phone during order entry.
In addition to the current pending dispute, Mr. Forster has been involved in two other customer disputes between 2009-2023. These included allegations of mismanagement, unsuitability, and an unsuitable variable annuity recommendation. His former employers settled these claims for a total of $862,500. Mr. Forster generally denied the allegations in these cases.
FINRA rule explanations
FINRA Rule 2010 requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Making unauthorized transactions in client accounts violates this ethical standard. Additionally, FINRA Rule 3260 prohibits discretionary trading in a customer’s account unless the customer has provided written authorization and the account has been accepted as discretionary by the broker’s firm.
Brokers have an obligation to make suitable investment recommendations based on a particular customer’s financial situation, needs and objectives. FINRA Rule 2111 requires a broker to have a reasonable basis to believe a recommended transaction or investment strategy is suitable for the customer. Unauthorized trades may not align with a client’s risk profile or investment goals, making them unsuitable.
Consequences and lessons learned
Investors who suffer losses due to unauthorized trading may be able to recover damages through FINRA arbitration. It’s crucial to regularly review your account statements and trade confirmations to identify any suspicious activity. If you believe your broker has made unauthorized transactions, notify their firm’s compliance department immediately and consult with an experienced securities attorney.
This case underscores the importance of working with a trustworthy financial advisor who prioritizes your best interests. Before hiring a broker, research their background and disciplinary history using FINRA’s BrokerCheck tool. Don’t hesitate to ask questions, voice concerns, and ensure you fully understand and approve of the trading activity in your account.
If you were a client of John Forster and believe he made unauthorized trades in your account, contact the investment fraud attorneys at Haselkorn and Thibaut for a free and confidential consultation. Call 1-888-784-3315 today. Attorneys are available to help you explore potential claims and legal remedies to recover your losses.
