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Churning Information
Date:
Duration: 1:18
Information about what constitutes the securities practice of churning and what legal action can be taken to help victims of this practice.
Video Transcript
One way a broker is compensated is based on the volume of transactions he or she conducts for a customer. When a broker puts his own interests ahead of the interests of the customer by affecting trades that are excessive in light of the customer's objectives, the broker is "churning" the account. Churning is also referred to as stock churning or commission churning, and basically it's a way for brokers to generate more commissions for themselves at your expense. This act constitutes fraud and violates state and federal securities laws.In order for the trader to constitute churning, the broker needs to have explicit or implied control over the trading. With such control, the broker must have then abused the client's trust by engaging in trades which are excessive in frequency and size when considering the investor's risk tolerances, financial resources and trade objectives.
If you believe that you may be a victim of churning, you have certain rights that may provide you an opportunity to recover your losses from your stockbroker or brokerage firm. To contact a securities fraud attorney, complete our free case evaluation now by clicking the on-screen link. A representative will contact you if a legal course of action is appropriate.
