According to the U.S. Securities and Exchange Commission (SEC), churning
is defined as “excessive buying and selling of securities in a customer’s
account to generate commissions that benefit the broker.” The broker
has the responsibility of overseeing and controlling the investments in
the account, to prevent this. Usually, these responsibilities are laid
out in written agreements.
Full Legal Support & Advocacy
Churning is illegal. If it is discovered that the broker is acting outside
of these agreements or acting in his or her own self-interests, it is
possible that they have violated the agreements. Now, every investor’s
situation will depend on the circumstances of the particular investment,
and some actions may be appropriate.
When these cases go into arbitration with FINRA, the administrators and
panels will be as objective as possible to determine whether or not the
claims of churning are valid.
Some examples of churning might include:
- Broker engages in excessive trading
- Broker tries to push transactions to increase commission
- Selling dividends for a quick gain
- Placing too much into one type of stock
- Encouraging a customer to invest in a high-risk venture
The bottom line? Unscrupulous brokers are scammers. They are not looking
out for you—their actions only work to benefit themselves. If you
believe you have a churning claim, we urge you to contact our
securities fraud lawyers at Baldwin Mader Law Group promptly.
50+ Years of Combined Experience
Collectively, our lawyers have amassed
over 50 years of experience working to protect people’s investments and fight to recover any
losses incurred. Recently, we recovered over $5.5 million in a FINRA arbitration
case against a broker dealer—one of the highest ever awarded in
the nation. Because our range of service extends to all areas of investment
fraud, we are prepared to advocate for you.
Contact us for your free initial case consultation.