Churning, Fraud, Failure to Supervise and Negligence | Churning Attorneys
Churning occurs when your investment professional recommends or initiates trades solely for the purpose of generating commissions. Churning by your investment professional most often occurs in stock and option trades. The industry standard for determining whether churning has occurred is to examine the annualized turnover ratio. This ratio compares the total cost of the purchases made for a portfolio during a specified period of time to the amount invested. An annual turnover ratio of 6 indicates that an account has been churned. An investor whose account has been charged may recover the excessive commissions charged plus the value of the decline in the investor’s account as a result of the fraudulent conduct.
Whenever an investment professional is recommending a highly active investment style with significant amounts of investments changing within the portfolio, a red flag should be raised. Churning will impair the performance of the investor’s account. Accounts that are churned will often require above average returns just to keep pace with the costs of the excessive trading. Churning is fraudulent conduct that breaches the investment professional’s fiduciary duty to the investor and provides strong evidence that the investment professional is not being properly supervised pursuant to industry standards.
Legal Help for Victims of Churning, Fraud, Failure to Supervise and Negligence
If your broker or investment professional’s commissions are impacting your account’s performance, you may have a claim for churning, fraud, failure to supervise, and negligence. Gilman Law LLP is a leading securities fraud law firm and is here to help you recover damages for churning. For a FREE evaluation of your case, please fill out our online form, or if you need to speak to an attorney right away CALL TOLL FREE (1-888-252-0048) today.