West Palm Beach Securities Litigation Attorneys Fight to Put a Stop to Churning & Excessive Trading in Your Investment Accounts
Active trading of stocks can be a lucrative investment strategy, and many investors give their brokers wide latitude to make trades as they see fit to maximize portfolio performance. However, any trading must always be done in the investor’s best interests. If you believe your account is being excessively churned to generate profits for the broker at your expense, you may have a claim against your broker and be able to recover compensation for the financial harm done to you. The securities litigation attorneys at McCabe Rabin in West Palm Beach will be happy to visit with you and look into whether your account is being churned to your detriment.
What is Churning?
Churning, or excessive trading, occurs when a broker engages in frequent trading of stocks to increase the broker’s commissions to the detriment of the customer. The commissions can be so high that the investment account may never turn a profit but instead gets eaten up by fees. As the investor, you may not even know about the excessive trading going on in your account. If you do notice a high volume of trading that seems inconsistent with your investment strategy, and your broker tells you something like he or she wanted to “get out” after a small profit in the stock, it may be time to talk to a securities fraud attorney about potential wrongful activity in your account.
How do I Know if my Account is being Churned?
Is the activity in your account part of an aggressive yet legitimate investment strategy, or is it being undertaken merely to generate commissions and make the account more profitable for the broker and less profitable for the account holder? This is a complex question that requires thorough, intensive investigation by experienced professionals. At McCabe Rabin, we utilize the help of financial experts to crunch the numbers and evaluate the turnover ratios for each of your stocks. The higher ratio per stock and across a variety of stocks, the more likely it is that abuse has occurred in your account.
Supervisors at brokerage firms have an obligation to look out for a broker’s frequent trading, but many do not because of the large number of accounts they are responsible for monitoring, or they turn a blind eye because the commissions are generating such a good profit for the firm. If you feel the brokerage is not working for you as it should be, then it may be time to get a lawyer on your side to protect your rights and valuable investments.
Pay Special Attention to Commission-Based Accounts
Most brokerage firms these days are fee-based, but many brokers still work by commissions, where they make money every time a trade happens. If your broker works off of commissions, pay attention to the number of transactions – how many buys, how many sells – are going on in your account. You may need help to determine whether the activity in your account is excessive and likely not conducted in your best interests.
Call McCabe Rabin in West Palm Beach with Concerns about Churning and Excessive Trading
If you believe that you may be the victim of churning or excessive trading, call McCabe Rabin to speak with a team of knowledgeable and experienced stockbroker misconduct attorneys. Call our office in West Palm Beach at 561-659-7878 for a free consultation regarding your concerns. We can also be reached toll free at 877-915-4040, or contact us online.