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 case consultation.