New York, NY securities attorney Jenice L. Malecki talks about some of the common sales practice violations that are covered by the FINRA Conduct Rules. She notes that sales practice violations in the securities industry are varied and significant. They can include high-pressure sales tactics, reminiscent of the “Boiler Room” era, where investors were rushed into transactions without sufficient time to consider the risks. Unauthorized trading is another concern, as brokers are required to obtain the investor’s consent on the same day a trade is executed, reflecting the actual market price at that time.

Churning, or excessive trading designed to generate commissions for the broker rather than returns for the investor, is strictly prohibited. Suitability standards, now codified under Regulation Best Interest, require that investments align with the client’s objectives, risk tolerance, and financial profile. Over-concentration is also a key concern; investors should not have a disproportionate exposure to a single sector, such as oil and gas or technology, to avoid excessive portfolio volatility. These rules, embedded in FINRA’s conduct standards, are central to protecting investors from misconduct and ensuring responsible brokerage practices.