A Violation of Fiduciary Responsibility
Churning refers to cases in which stockbrokers inflate their commissions by excessively trading on an account over which they have discretionary or constructive control. In effect, when churning is happening, a stockbroker will buy and quickly sell off stocks without:
- Considering whether these purchases (or sales) are aligned with a client’s needs, financial resources and overall goals
- Taking into account the risks that a client is able and willing to shoulder
- Allowing these stocks or securities to really appreciate before they are sold.
Overtime, churning will slowly bleed out the funds in an account as negligent stockbrokers continue to draw excessive commissions from it.
When investors suspect that their stockbroker may be conducting churning, it’s crucial that they are aware that:
- Churning is both a breach of the stockbroker’s fiduciary duties and of Federal and state securities trading laws.
- Investors can be compensated for the losses they have suffered as a result of a negligent stockbroker’s churning.
- The Denver stockbroker malpractice attorneys at Cristiano Law, LLC are ready to stand up for their rights and help them hold negligent brokers accountable for their illegal and unethical actions.
Signs of Churning
If you have turned over control of your investment accounts to your stockbroker, make sure that you are aware of these signs of churning so you know when to step in and take action against a negligent stockbroker. Some of the more common signs of churning include:
- A sudden, inexplicable increase in the number of transactions occurring with your account
- Repeatedly trading in a single stock
- “In-and-out” or option trading
- A turnover rate that is greater than two times per year (Courts use the “two, four, six” rule when it comes to churning; specifically, a turnover rate of two is typically an inference of churning; a turnover rate of four is generally sufficient to make a presumption of churning; and a turnover rate of six is usually adequate to make a conclusion that churning has occurred).
When you notice any of these warning signs of churning, it’s time to contact the Denver stockbroker malpractice attorneys at Cristiano Law, LLC.
You Can Trust the Denver Stockbroker Malpractice Lawyers at Cristiano Law, LLC
If you believe that your stockbroker is drawing excessive commissions from your accounts through churning, the Denver stockbroker malpractice attorneys at Cristiano Law, LLC are ready to fight for you. Our trusted attorneys have more than 33 years’ experience standing up for the rights of our clients and holding negligent stockbrokers accountable, and we are ready to put our experience and resources to work for you.
At Cristiano Law, LLC, we believe that the practice of law is a helping profession. As a result, our attorneys are firmly committed to providing people who have been victimized by the careless, indifferent or deceitful actions of brokers the highest quality of legal services. Whether inside or outside of the courtroom, our Denver stockbroker malpractice attorneys will always defend our clients’ rights, will provide them with honest answers about their case and will work diligently to help them secure the best possible resolutions to their important legal matters.
Let’s Talk about Your Rights and Case
We invite people who may have experienced losses due to stockbroker negligence to attend an initial consult with one of our Denver stockbroker malpractice lawyers. In most cases, these initial consultations are free, and we can get a case started at no upfront cost to our clients. To set up a meeting with one of our attorneys, call us at (303) 407-1777 or email us using the form on this page.
Evening and weekend appointments are available for your convenience, and our attorneys can commute to your city or town to ensure that you get the legal help you need wherever you may need it.