Types of Churning Claims

Serving Orlando, Florida and taking cases Nationwide

Stockbrokers get paid every time they trade with customers´ money. Each customer´s account has specific parameters based on the individual´s income, tax needs, and risk tolerance. When you open an account with a broker, you provide them with this information as the basis for their trading activity.

Churning is considered excess trading of securities for a particular account. Because a broker earns money each time they traide, it´s often tempting for brokers to trade more than is necessary, instead of respecting customer preferences.

If these trades make money, so much the better for everyone involved. But all too often, excessive trading can cause investment situations to worsen. Unfortunately, if this happens, your broker doesn´t owe you anything in compensation unless you file a lawsuit.

Some common types of churning include:

• 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 have 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.