Call Now for a FREE Consultation (888) 513-3010
How Do I Know If My Broker is Churning My Account?

How Do I Know If My Broker is Churning My Account?

Churning claims

“Churning” is the act of excessive trading by an unethical broker. Brokers do this because they make a small fee or commission on every trade, which means an unethical broker has an incentive to make a number of small, meaningless trades that pad their accounts but do nothing for you.

The difficulty on your part is determining when a broker is engaged in churning. After all, making trades is a key part of a broker’s job, and in certain circumstances it’s even appropriate for a broker to make a lot of trades. So without a grounding in finance and market dealing, how can you tell if your broker is churning?

The key component is the nature of your account and your risk tolerance. Different investment accounts call for different approaches – what may be perfectly natural aggressiveness for one investor could well qualify as churning for another. After all, your broker’s strategy must be suited to your specific needs and objectives as articulated at the time you agreed to invest with the broker.

To prove churning, you must first demonstrate that your broker has control of your investment. Once that is proven, you have to show that the broker’s trading was excessive. Determining “excessiveness” can be complicated and involves determining your account’s turnover rate and cost-equity ratios.

Our experienced attorneys understand the laws and regulations regarding churning and we can evaluate your trading activity to determine if you were the victim of churning. If you were, we can help you pursue justice and compensation.

If you’ve been the victim of churning or any other unethical broker activity, please call Colling Gilbert Wright today at 1-407-712-7300 for a free consultation.