Churning

Plaintiffs' Personal Injury Law Firm

Churning

Napoli Bern Ripka LLP is currently trying arbitrations on behalf of clients who have suffered losses or have paid unreasonably high commission fees to their brokers or financial advisors as a result of the practice of churning. According to the Securities and Exchange Commission, churning refers to the excessive buying and selling of securities in your investment account by your broker, for the purpose of generating commissions and without regard to your investment objectives. For churning to occur, your broker must exercise control over the investment decisions in your account, either through a formal written discretionary agreement or otherwise. For example, if you relied on your broker's advice because you were unable to evaluate the broker's recommendations and exercise your own judgment, your broker may have exercised control over your account. Churning can be a violation of SEC Rule 15c1-7 and other securities laws.

The major securities industry self-regulatory organizations have rules prohibiting churning and excessive trading. Excessive trading is the same as churning, but without the requirement that the person engaging in the trading does so for the purpose of generating commissions. Churning and excessive trading can violate FINRA Rule 2310, FINRA Rule 2310-2(b)(2), NYSE Rule 408(c), and NYSE Rule 476(a)(6).

If you feel that broker has engaged in the practice of churning or excessive trading of securities in your account, in order to generate commissions without your best interests in mind, please contact us. You may be entitled to recovery of the commissions paid to your broker, as well as losses incurred due to poor performance of the securities selected by your broker. We are also actively seeking and representing clients in cases involving losses due to mismanagement of investments by asset management firms, hedge funds, and mutual fund managers.