Stock Fraud Attorney

Serving Orlando, Florida and taking cases Nationwide

Churning Claims

Churning, also referred to as excessive trading, is another common complaint against unethical stock brokers. Because brokers earn profits for each trade they make, some brokers will make unduly large numbers of stock trades on behalf of their clients, whether such trades are profitable or not.

It is not always immediately apparent when a broker is engaging in churning, however. Depending on the circumstances, making a large number of trades may be the best strategy for the client. If, however, your broker has made an unusual number of trades-particularly over an extended period-with little to no monetary benefit to you, you may have grounds for a claim of stock broker fraud. One key element to establishing a churning claim is to review your account's overall growth and determine whether your profits are sufficient to cover the expenses of trading. In some case, even a single unnecessary trade may be considered churning if the trade serves no real purpose for the client.

Some common types of churning include mutual fund churning and 'wash' transactions.

Moving mutual funds. Some brokers may transfer money among different mutual funds accounts to accumulate fees. For this reason, many honest brokers require clients to provide a 'switching letter' to prove that the client requested money be moved from one mutual fund account to another.

Repeated transactions and "wash" transactions. Another common type of churning involves making multiple simultaneous transactions or rapid, back and forth transactions that cancel each other out.

Churning can often be difficult to prove, and may only be apparent when viewing your history over the long term. If you have questions about excessive activity in your account, it may have some reasonable explanation, such as rapid market changes, or it may indicate churning on the part of your broker.

If you believe that you or a loved one has been victimized by a stock broker who has churned your account, please contact our stock fraud attorneys who has experience representing investors with churning claims. We'll evaluate your claim for free and help you make sense of the activity on your account. If your account has been manipulated, we'll fight to get your money back.