Stock Broker Fraud
“Churning” takes place when a broker engages in excessive buying and selling of securities in a client’s account in order to generate commissions for the broker. Excessive trading that is inconsistent with the goals and financial position of the investor is evidence of churning. Churning is not only unethical, it is illegal. Such conduct violates SEC Rule 15c1-7 and other securities laws.
Most individuals do not have the expertise to trade their own securities, so they employ a broker to buy and sell securities on their behalf. Many investors give brokers the power to trade on their accounts and trust them to make trades that are in their best interest. When a broker churns the account, he or she has violated the client’s trust and breached the broker-client relationship.
An experienced stockbroker fraud lawyer at Zamansky LLC can evaluate your claim to determine whether churning or excessive trading has occurred. To succeed in an account churning claim against a broker, the investor must prove the following elements:
- The broker exercised control over the client’s account
- The broker engaged in excessive trading
- The broker acted with the intent to defraud or with disregard for the best interests of the client
Stock broker fraud in the form of churning is a complicated concept and can be difficult to establish. What may be considered a proper and acceptable level of trading in an account for a sophisticated, risk-taking investor may be deemed wrongful for a risk-averse retiree. Excessive trading is measured against the specific investment objectives of the particular investor.
The securities fraud attorneys at Zamansky LLC have decades of experience investigating and prosecuting churning claims against stock brokers. We know how to establish and prove that excessive buying and selling has taken place. Our FINRA arbitration attorneys will carefully scrutinize all trading activities, broker commissions and fees on your investment accounts. If we determine that churning or excessive activity has occurred, we will aggressively pursue your claim against the broker and brokerage firm. Our attorneys will work to ensure that the broker is held accountable for the fraudulent actions and we will fight to recover any money that you may have lost as a result of the churning activities.
If you suspect excessive trading or high broker commissions in your investment accounts, please contact a stock fraud attorney at our firm today.