Churning
Protecting Investors from Excessive Trading
Investing in the stock market involves trust—trust that your broker or financial advisor will act in your best interest and manage your investments responsibly. Unfortunately, some brokers engage in unethical practices to increase their own profits at the expense of their clients. Churning is one such practice, where a broker excessively buys and sells securities in a client’s account solely to generate higher commissions. This deceptive behavior can lead to significant financial losses for investors and is a clear violation of the broker’s fiduciary duty.
At Girard Bengali, APC, our experienced securities attorneys are dedicated to representing investors who have been harmed by churning. We understand the complexities of these cases and are committed to holding brokers accountable for their misconduct. If you suspect that your broker has engaged in churning, it is crucial to seek legal counsel immediately.
What Is Churning?
Churning occurs when a broker engages in excessive trading in a client’s account without regard for the client’s investment goals, risk tolerance, or financial situation. The primary motivation for churning is to generate more commissions for the broker, often at the expense of the client’s portfolio. Key indicators of churning include:
High Trading Volume
If your account shows an unusually high number of trades that do not align with your investment objectives, it may be a sign of churning.
Unauthorized Trading
If you see trades in your account that you did not authorize your broker or advisor to make, this can be cause for concern and should be evaluated by a legal professional with experience in securities law.
Frequent Buying and Selling
Churning often involves the rapid buying and selling of securities, which may result in little to no profit for the client but significant commissions for the broker.
Unexplained Losses
If your account has experienced unexplained losses despite a generally favorable market, it could be due to excessive trading that benefits your broker more than you.
Inappropriate Recommendations
A broker engaged in churning may recommend trades or investment strategies that are not suitable for your financial situation or long-term goals.
Excessive Fees
If your total fees seem high, if there is a sudden rise in fees compared to previous periods, or if one segment of your portfolio consistently incurs high fees, this may be a sign of churning.
The Impact of Churning on Your Investments
Churning can have a devastating impact on your financial health. Excessive trading can erode your investment returns through increased transaction costs, taxes, and fees. Additionally, churning may expose your portfolio to unnecessary risks that do not align with your investment strategy. Over time, these practices can significantly diminish the value of your investments, leaving you with substantial losses.
Protecting Your Rights as an Investor
Churning is a serious violation of the trust you place in your broker. If you suspect that your broker has engaged in churning, it is essential to take action as soon as possible. The attorneys at Girard Bengali, APC, are dedicated to protecting the rights of investors and pursuing justice for those who have been wronged. We will work tirelessly to recover the compensation you deserve and ensure that your broker is held accountable for their actions.
Contact Our Experienced Securities Attorneys
If you believe that you have been a victim of churning, do not wait to seek legal advice. The experienced attorneys at Girard Bengali, APC, are here to help you navigate the legal process and recover your losses. Our attorneys will thoroughly review your account statements, trading patterns, and investment strategy to determine if your broker has engaged in excessive trading. We are committed to helping you recover the losses you have suffered as a result of churning and to holding the responsible parties accountable. To arrange a confidential consultation, please call 866-778-6821 or contact us online. We are ready to fight for your financial well-being.