What Is Account Churning

Full Video Transcript

Many investment professionals make their income based on commissions. Whenever they make a trade on your behalf, you're charged a small fee per transaction. Unfortunately, some stockbrokers, brokerage firms, or investment advisors may attempt to take advantage of clients by performing excessive unnecessary trades in order to increase their commissions. This is called account churning and is a serious offense. It may also violate certain laws or regulations. If you believe you have been charged excessive commissions, it's important to have an honest discussion with your broker or advisor as to why you were charged those fees. If you don't think your broker or advisor is being honest with you, it may be time to speak with an attorney. A securities attorney can help determine whether your rights were violated, and may be able to help you recover any losses that resulted from account churning.

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