Churning (Excessive Trading)

If a broker traded your account over and over in ways that generated commissions but did not serve your goals, you may have been the victim of churning. It is a form of misconduct where the activity benefits the broker, not you.

The Account Was Worked for the Broker’s Benefit

Brokers are not supposed to treat your account as a source of commissions. When trading is driven by what the broker earns rather than what you need, that is a breach of the duty they owe you.

What Churning Looks Like

Churning usually shows a pattern, such as:

• A high volume of buying and selling that does not match your stated goals
• Frequent in-and-out trades with no clear strategy
• Commissions and fees that eat up a large share of your account
• Trading that increases right after you add money
• The broker, not you, driving nearly all the activity

Signs Your Account May Have Been Churned

• Your statements show constant buying and selling
• Fees and commissions seem high relative to your returns
• You did not request or understand most of the trades
• Your account value dropped while trading activity stayed high
• You were a conservative investor, but your account was very active