Investment fraud is a serious crime that can have devastating financial consequences for
victims. Investigators and federal agencies use a variety of techniques
to identify and stop investment fraud. One of these techniques is the
This ratio is commonly used to identify
churning and excessive trading of investment accounts. If you think you are the
victim of fraud, or you just want to make sure your accounts are secure,
our firm can help. We can use various techniques and calculations, including
the cost-equity ratio, to determine whether or not your investment accounts
have been the victim of fraud.
Cost-Equity Ratio and How It Is Used to Determine Fraud
The cost-equity ratio is a complicated calculation. It measures the amount
that a specific investment must make each year to break even. The rate
of return on an investment account, after all charges and costs (including
the costs of commissions), is used to determine the amount that is needed
to break even.
According to the Securities and Exchange Commission (SEC), a cost-equity
ratio of greater than 20% is most likely a sign that the investment account
has been subject to excessive trading. Thus, if your investment account
requires a 20% cost-equity ratio just to break even in a certain year,
this is a warning that your account may be compromised. Investments that
are trading above and beyond the goals and norms must require higher cost-equity
ratios to balance out each year. Thus, this ratio is a good indicator
of whether or not an investment account has been overly traded or churned.
Call Our Investment Fraud Attorneys at (310) 220-0988
Baldwin Mader Law Group, we represent victims of investment fraud. Our knowledgeable legal team
can investigate your account by using the cost-equity ratio and by examining
the turnover rate and in-and-out trading to determine if investment fraud
has taken place. With more than 50 years of combined experience, our firm
can answer your questions and guide you through the process. Once we detect
and identify the type of fraud you have been the victim of, we can determine
who is responsible and aggressively represent you as you pursue justice.
Contact Baldwin Mader Law Group online or call (310) 220-0988 for a free initial case evaluation.
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