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 cost-equity ratio.
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.
What Is the Cost-Equity Ratio & How Is It 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
or 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 California Investment Fraud Attorneys Today at (310) 220-0988
At 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.
today for a free initial case evaluation.