The law firm of Oakes & Fosher is presently investigating the alleged misconduct of securities broker Timothy Scherwa. According to his publicly available FINRA BrokerCheck report, Timothy Scherwa has been the subject of a FINRA sanction.

Timothy Scherwa is New Jersey based securities broker. He has worked in the securities industry for twenty-three years. During his career, he has been registered with four different securities firms.

His Registrations

  • D.H. Blair & Co. (1996-1997)
  • Morgan Stanley (1997-2014)
  • Wells Fargo (2014-2017)
  • Capitol Securities Management (2017-Present)

The Allegations

Timothy Scherwa was officially sanctioned by FINRA in September 2018. The findings in this matter state that he allegedly engaged in unauthorized discretionary trading. He allegedly executed 382 discretionary trades in 12 non-discretionary customer accounts. He did this without written authorization from the customers and without prior written acceptance of the accounts as discretionary from his member firm. For these alleged actions, he was fined $7,500 and suspended from acting as a securities broker in any fashion for a period of two of months. He was terminated from Wells Fargo Clearing Services one year prior to the FINRA sanction due to the allegations.

What is Discretion?

Securities brokers are required to obtain their customers’ authorization before executing trades on their behalf. Just because an investor has hired a securities broker to recommend suitable investments, does not mean they have forfeited the right to ultimately decide what they want to be invested in.

There is a trading practice known as discretion that allows securities brokers like Timothy Scherwa the ability to execute trades in a customer’s account without having to obtain the customer’s authorization for every trade. However, before a broker can begin discretionary trading, they are required to obtain express written authorization from the account holder that allows them to begin trading the account in that manner. The broker’s member firm must also deem the account in question as suitable for discretionary trading.

The truth about discretion is that it can actually be an incredibly slippery slope. This is due to the incredibly large amount of power it gives to the broker. Discretion allows brokers the opportunity to invest their customers in securities they are highly unsuited for. It also allows them the opportunity to trade their accounts excessively. Both of these acts can be financially detrimental to investors.

Oakes & Fosher Can Help

Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money int his fashion may actually be entitled to damages.

Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Timothy Scherwa, please contact Oakes & Fosher for a free and private consultation.