Churning and Excessive Trading Cases

Stock Brokers' Mismanagement of Financial Assets

Churning is excessive buying or selling in a customer's account by a broker. This is often done to increase a broker's commissions. It is a violation of SEC and FINRA rules and it can lead to significant losses for an investor.

Determining what constitutes excessive trading can be difficult. At Edward W. Vioni, Attorney at Law, LLC, we can help you. We have more than 30 years of experience handling stock broker fraud cases. Additionally, attorney Edward W. Vioni is a former stockbroker and a former compliance officer for a brokerage firm. We can provide you with the knowledge, insight and representation you need at every stage of your case.

Uncovering and Proving Excessive Trading

Churning is not a simple concept and neither is proving excessive trading. Every situation is different, and as a result, there is no straightforward test to determine if churning has occurred.

When you work with our firm, we look closely at the type of account that's involved. With some accounts, high levels of trading may be natural and expected, while the same level of trades in a different type of account may be unjustified churning. An example of an account that would not justify excessive trading is a retiree's account.

To help decide whether the trading in your account is excessive, we will consider your goals as well as calculate the "turnover ratio" for your account. Turnover ratios are the total amounts of purchases made in the account, which is then divided by the average monthly equity in the account. Turnover is then annualized.

An annual turnover ratio of six (which means that the equity in the account was invested six times in a year) can be a sign of excessive trading in a typical customer account. However, with a day trader account or some margined accounts, a typical ratio of six wouldn't indicate churning. We can help explain the differences between the account and whether the ratio is high or low for your type of account.

Other Elements of a Churning Case

In addition to demonstrating excessive trading with your account, churning requires that the broker had control over your account. Also, we must show that the broker intended to defraud you. These elements can be difficult to prove and often brokers and customers in arbitration totally ignore these elements of a churning case.

At our firm, we will thoroughly review the facts, investigate the situation and provide you with advice and representation you need at every stage of your case.

Contact a Lawyer to Assess Your Churning Case

We are dedicated to providing aggressive and cost-effective representation to clients with stock churning and related cases. Call us at our Norwalk law offices today at 203-326-1229 to schedule a free consultation with a stock broker fraud attorney in Connecticut. References and case studies are available upon request.