Misappropriation
Categories: Accounting, Trading, Ethics/Morals, Board of Directors
Misappropriation can have multiple meanings, but in finance, it usually means that client funds are used in an unauthorized or inappropriate way.
Example
If you give your money to a brokerage firm and a broker at the firm uses the cash to buy a condo for his girlfriend, that is misappropriation. According to FINRA Rule 3070, if the brokerage gets wind of the problem, they must report the issue and take action.