Unless you have given formal discretionary authority to your investment professional in writing, he or she is not permitted to make trades on your behalf without your prior authorization of each transaction. If you lose money as a result of such an unauthorized trade, you have a claim against the investment professional and his or her firm for the loss.

If you tell your investment professional to purchase or sell a certain number of shares of a stock, you given what is called "time and price discretion," and the investment professional may, within reasonable bounds, decide exactly when to execute your transaction, even in a nondiscretionary account.

Likewise, even if you have a discretionary account, your investment professional is supposed to follow your instructions with respect to the exercise of that discretion. If you have told your investment professional, for example, that you do not want to buy anything "risky" or "on margin," the investment professional has an obligation to respect your instructions.