Have you noticed an unusual number of trades on your brokerage account? This may be a sign that your broker or advisor has made an unnecessarily high number of trades simply to generate commissions for themselves rather than as part of a legitimate trading strategy designed to realize investment gains for you. This practice, known as churning, can have significant financial consequences. Not only might it cost you excessive and unnecessary commissions, but it might also result in losses on your investments due to poor performance in unsuitable trades or missing out on continued appreciation of your securities investments.
Churning is unethical, and there are rules in place to protect investors from this practice. However, you may need complex evidence to prove that your broker or advisor was indeed engaging in churning and not merely being proactive on your financial behalf. As a result, you need knowledgeable legal counsel with extensive experience in claims involving overtrading in brokerage accounts.
Let the legal team at Erez Law, PLLC help you assert your rights and seek fair compensation by investigating your claims, crafting a compelling case to show a broker’s churning activity, and documenting the full extent of your financial losses. Contact our firm today for a free initial case evaluation with a stockbroker churning attorney in California to discuss the next steps.
What Is Churning in Investment Accounts?
The term “churning” refers to making excessive trades in an investment account, primarily to generate commissions from the trades. Churning occurs when a stockbroker makes trades without consideration of the client’s investment goals, which may not support a large number of trades. A stockbroker may engage in misconduct by trading securities on a client’s account to generate commissions for themselves rather than to generate returns for the client. Churning is securities fraud in California and a violation of a broker’s duty to act in the investor’s best interest.
Common Signs of Churning Fraud
Investment account holders should familiarize themselves with the common signs of excessive trading or churning by a stockbroker, which may include:
- A broker engages in high-frequency trading without a clear investment strategy (e.g., the broker appears to make trades solely for the purpose of making trades rather than entering or exiting specific investments)..
- An account holder incurs excessive fees or commissions.
- An account holder experiences sudden and unexplained losses in their portfolio.
- A broker engages in frequent trading when a client has rejected an aggressive or high-risk trading strategy.
- An investor experiences high turnover of investments.
- The portfolio has an overall poor performance.
If you have noticed these signs, you should immediately contact an unauthorized trading lawyer in California to help you seek compensation for excessive commissions, fees, and significant investment losses you never should have incurred.
Why Hire a California Churning Fraud Lawyer?
Proving that a stockbroker has engaged in churning on a client’s account may involve complex factual and legal issues. As a result, it’s essential to hire an excessive trading lawyer in California. A churning investment fraud attorney in California from Erez Law, PLLC can help you pursue your financial recovery claims by:
- Investigating your claims to recover evidence of a stockbroker’s misconduct, including brokerage statements, trading history, stock performance records, and correspondence
- Calculating your financial losses from a stockbroker’s churning, including losses due to excessive commissions or losses on investments
- Working with financial experts as needed to demonstrate how your account performance fell short of what it could have achieved due to your broker’s churning activity
- Evaluating your legal options for seeking compensation for your losses, such as pursuing FINRA arbitration or private arbitration as required by your brokerage account agreement or vigorously negotiating a fair and favorable settlement with your broker
- Handling all the aspects of pursuing a FINRA arbitration claim and vigorously advocating your case to the arbitrator or arbitration panel
At Erez Law, PLLC, our attorneys have extensive, in-depth experience in pursuing stockbroker misconduct claims on behalf of clients who have suffered financial losses due to churning and other improper acts by brokers and financial advisors. For over 35 years, our nationally recognized firm has advocated for the rights and interests of individuals harmed due to their broker’s misconduct. We have recovered over $300 million in compensation for clients, including in more than 2,000 successful arbitration cases. We’ve been successful in winning at trial or final hearing time and time again.
How Can I Recover Losses from Churning Fraud?
In the event your stockbroker has engaged in churning with your investment account, you may have the right to seek financial recovery for the harm you suffered as a result, including losses on investments and commissions from the excessive number of trades. Your client agreement with your stockbroker likely requires you to submit your claims to arbitration through FINRA. As arbitration in either case is a complex process, it is critical that you seek experienced legal guidance.
In a churning claim, you may have the right to recover compensation for losses stemming from:
- Unnecessary stockbroker commissions generated by excessive trading volume
- Loss of investment in unsuitable or unprofitable stocks or other securities when a stockbroker invests your money into a security solely to generate commissions
- Lost additional growth in the value of investments caused by a stockbroker prematurely trading out of the investment as part of a churning practice
Contact a California Excessive Trading Loss Attorney
Do you suspect your stockbroker has caused you financial losses due to churning/excessive trading? If so, you need experienced legal advocacy to demand accountability and compensation. Contact Erez Law, PLLC today for a free, no-obligation consultation with a California churning fraud lawyer. We look forward to discussing your legal options for seeking compensation and exploring how we can assist you in pursuing them.