I’m An Investor. How Do I Know If I Am The Victim of Excessive Trading By My Broker?
Contact our Experienced Churning Loss Attorneys Today
Over the years, Shepherd Smith Edwards and Kantas Churning Loss Attorneys (investorlawyers.com) has represented many clients who have been the victims of excessive trading, which is also known as churning. This is what happens when a financial advisor makes too many trades in an investor’s account for the purposes of earning additional commissions and not because it is in the customer’s best interests.
These commissions can add up and cause significant losses. Not only that, but if a broker excessively trades so a customer is invested too much in one particular financial product, this can lead to overconcentration and exposure to a higher risk of loss. Also, too many trades can up the cost of having a commission-based account. This may mean that your investments will have to garner even greater return rates for your account to pay off commissions, interest, and other fees just to break even let alone turn a profit for you—if the latter is even a possibility at that point.
Churning is against the law.
The Financial Industry Regulatory Authority (FINRA) also has Rule 2111 (Suitability), which requires brokerage firms to have reasonable grounds for both recommending a certain number of transactions within a given timeframe and determining that this is not excessive.
Your broker churning in your account is not your fault. However, there are possible warning signs to look out for, such as:
- Unauthorized trades made in your account.
- Investment purchases you did not authorize.
- Frequent in-and-out sales and purchases of securities that are not in line with your financial goals.
- A lot of commissions are being charged to your account.
Brokers who are purposely engaging in excessive treading have been known to come up with excuses to justify their behavior. This is just one more reason why you should work with skilled churning attorneys who know how to determine whether you have grounds for a financial advisor fraud lawsuit to pursue damages.
How Can Our Seasoned Excessive Trading Law Firm Help You Pursue Damages?
Exclusively fighting for investors for over 30 years, we have worked with many who have suffered unnecessary losses due to churning. To assess whether this has happened to an investor, we look at a number of mathematical metrics, such as:
Cost-to-equity ratio: How much it costs an investor against their account’s size, and when said costs begin to make it mathematically unlikely—even impossible—for money to be made.
Turnover ratio: How frequently an investor’s overall portfolio is “turned over” with new securities and if this has become excessive.
Commissions-to-equity ratio: The total commissions paid divided by the average account equity over a certain period of time.
If we do determine that you have grounds for an investment loss recovery claim, and we decide to work together, we will thoroughly investigate what happened and build a solid lawsuit on your behalf. We also will provide you with robust securities law representation in FINRA arbitration, which is where churning disputes with brokerage firms are made. Even if your broker-dealer was not involved with your financial advisor’s decision to excessively trade in your account, you may be able to hold them liable for failing to detect and stop this type of broker misconduct.
How To Contact Us:
To schedule your free, initial case assessment, call (800) 259-9010 or fill out this online form.