Practice Area
Churning & Excessive Trading Attorneys
Churning is one of the most common forms of broker fraud — and one of the most provable. If your broker was trading your account to generate commissions rather than grow your wealth, you have a claim.
What Is Churning
Trading Your Account For Commissions
Churning occurs when a broker buys and sells securities in your account primarily to generate commissions — not because the trades benefit you. It is one of the oldest and most common forms of broker fraud.
To prove churning, we analyze your account statements and calculate two key metrics: the turnover ratio and the cost-equity ratio. A turnover ratio above 2.0 is a red flag. A cost-equity ratio above 20% means your broker needed to generate extraordinary returns just to break even.
Churning violates FINRA rules and securities laws. You can recover the commissions paid, losses caused by the excessive trading, and in egregious cases, punitive damages.
Warning Signs
- Frequent buying and selling you didn't authorize or understand
- High commission costs eating into your returns
- Investments that don't match your stated risk tolerance or goals
- Account losses despite a rising market
- Broker calls recommending frequent trades
- Difficulty getting straight answers about why trades were made
- Monthly statements showing dozens of transactions
Key Metrics
Common Questions
How do I know if my broker was churning my account?
Key indicators include frequent buying and selling, high commission costs relative to your account size, investments that don't match your stated goals, and account turnover ratios above 2.0. We analyze your account statements to calculate these metrics precisely.
What is the turnover ratio?
The turnover ratio measures how frequently your account was traded relative to its size. A ratio above 2.0 is a red flag. Above 6.0 is considered presumptive churning by most arbitrators.
What is the cost-equity ratio?
The cost-equity ratio measures the total commissions and fees as a percentage of your average account equity. A ratio above 20% means your broker needed to generate extraordinary returns just to break even — a sign of churning.
Can I recover losses from churning?
Yes. You can recover the commissions and fees generated by the churning, plus any net losses caused by the excessive trading. In egregious cases, punitive damages may also be available.
Suspect Your Account Was Churned?
Send us your account statements. We will analyze them for free.
888-741-7503