We seek compensation for investors whose brokerage accounts were churned.

When a stockbroker buys or sells securities for the primary purpose of getting a commission —rather than because the trade is financially sensible for the client— this process is referred to as “churning,” and it is illegal.

Churning or excessive trading contradicts the inherent responsibilities and fundamental legal responsibility broker holds regarding a client’s interests. Commissions from churning or excessive trading do not  represent the clients best interest and can render it nearly impossible for an investment portfolio to hold a sustainable profit.

The inherent components to claim churning are:

  • a broker working with reckless disregard for the interests of the client and intent to defraud or with willful
  • the broker exercised control over the account
  • the broker engaged in excessive trading in light of the character or risk tolerance of the account

The measurement of churning is the account’s “turnover rate” or sum of purchases divided by the account’s average value. Churning is noted by holding securities for short periods without any appreciable change in securities prices.

Other indicators of churning or excessive activity are transactions costs. One must calculate how much the account would have to generate simply to break even after transaction costs.

If you believe you may have lost money in churning schemes please contact us for a free, no-obligation consultation regarding your legal situation and potential recovery options, by phone at 888-998-0530, via email at arosca@roscalaw.com, or through the contact form on this page.