With the financial markets recovering from their lows of the 2008-2009 financial crisis, millions of investors have returned to the stock market, entrusting hard-earned monies to stock brokers and financial advisors, only to see the trust abused with the churning of their accounts. Churning involves the repeated purchase and sales of stocks for the sole purpose of generating commissions.
There are a number of means of detecting and analyzing the churning of customer accounts, including the calculation of turnover ratios, cost-equity maintenance factors, margin indebtedness, and Regulation T margin calls, all of which should alert brokerage firms to the simple fact that their brokers are improperly trading customer accounts.
Brokers and financial advisors who engage in churning of customer accounts usually prey upon unsuspecting and unsophisticated investors with little or no experience of the stock market, who have no appreciation of the simple fact that their trust is being abused for the purpose of generating commissions without any concern for their own customers’ best financial interests.
If you think your account has been improperly churned, we offer a free initial consultation to advise you of your rights.