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Why is “discretionary authority” an important thing to be aware of when dealing with stock brokers?

User Tommasop
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1 Answer

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Answer:

You could run the risk of investment fraud.

Explanation:

If you give a broker discretionary authority, you are giving them permission to buy and sell shares on your behalf without your knowledge.

If they are paid on commission, an unscrupulous broker may make a large number of trades even when it is not in your best interest, because the more trades they make, the more they earn from your investment.

You could run the risk of investment fraud.

User Marco Wahl
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