At Weltz Law, we understand the trust you place in your broker or financial advisor when you choose to invest. Unfortunately, some financial professionals betray this trust by engaging in unethical practices like account churning. If you suspect you've fallen victim to this fraudulent activity, our experienced account churning attorneys are here to help.

What is Account Churning?

Account churning, also known as excessive trading, occurs when a broker or financial advisor makes unnecessary trades in your account solely to generate commissions for themselves. This unethical practice violates federal regulations and breaches the fiduciary duty owed to you as an investor.

Signs of Account Churning

Recognizing account churning can be challenging, especially for investors who aren't deeply familiar with the intricacies of securities trading. However, several red flags may indicate your account is being churned:

Excessive Trading Activity

One of the most obvious signs of account churning is an unusually high frequency of trades in your account. This may include frequent buying and selling of the same or similar securities within short time frames. If you notice a sudden increase in trading activity that doesn't align with your investment goals or risk tolerance, it could be cause for concern.

Unexpected Financial Impacts

Account churning often leads to unexpected financial consequences. You might observe a significant increase in transaction fees or commissions, which can seem disproportionate to your account size or investment goals. Additionally, you may notice substantial drops in your account value even when the overall market is stable or rising, primarily due to excessive transaction costs rather than market movements.

Questionable Communication from Your Broker

This could be a red flag if you find it difficult to understand your broker's trading strategy when asked, or if their explanations are overly complex and seem designed to confuse rather than inform. You might also experience pressure from your broker to approve trades frequently, often with a sense of urgency or using high-pressure sales tactics.

Inconsistencies in Your Investment Approach

Watch out for sudden, unexplained changes in your investment strategy, especially if the new approach involves much more frequent trading than your original plan. The appearance of complex financial products that don't align with your stated investment goals or risk tolerance can also be a warning sign.

Declining Performance Despite Increased Activity

Perhaps the most telling sign is a decline in your investment performance even as trading activity in your account increases. If you're seeing poor or declining returns despite an uptick in transactions, it may be time to look closely at your account activity.

If you notice one or more of these signs in your investment account, it's crucial to take action. Contact Weltz Law for a thorough review of your account activity. Our experienced account churning attorneys can analyze your statements, calculate important metrics like turnover ratios, and help determine if you've been a victim of this unethical practice.

How an Accounts Churning Lawyer Can Help

At Weltz Law, we understand the devastating impact account churning can have on your financial well-being. Our experienced accounts churning lawyers are dedicated to protecting your rights and helping you recover your losses. Here's how we can assist you:

Comprehensive Case Evaluation

When you come to us with suspicions of account churning, we thoroughly evaluate your case. Our team meticulously reviews your account statements, trading history, and communications with your broker. We employ sophisticated analysis techniques, including calculating turnover ratios and cost-to-equity ratios, to determine if excessive trading has occurred in your account.

Building a Strong Legal Strategy

If we find evidence of churning, we develop a robust legal strategy tailored to your situation. Our attorneys are well-versed in securities laws and regulations, and we use this experience to build a compelling case on your behalf. We gather all necessary evidence, identify key witnesses, and prepare comprehensive documentation to support your claim.

Representation in FINRA Arbitration

Most churning cases are resolved through arbitration by the FINRA (Financial Industry Regulatory Authority). Our skilled litigators have extensive experience in this forum. We will represent you throughout the entire arbitration process, from filing the initial claim to presenting your case before the arbitration panel. Our goal is to secure the maximum possible compensation for your losses.

Negotiations with Brokerage Firms

In some cases, we may be able to negotiate a settlement with the brokerage firm without going through a full arbitration process. Our attorneys are skilled negotiators who know how to leverage the strength of your case to pursue a favorable settlement. We always keep your best interests at the forefront and consult with you at every step of the negotiation process.

Ongoing Support and Communication

Throughout your case, we provide consistent support and maintain open lines of communication. We understand that dealing with investment fraud can be stressful and confusing. Our team is always available to answer your questions, explain complex legal concepts in understandable terms, and keep you updated on the progress of your case.

What To Do If You Suspect Account Churning

If you believe you may be a victim of account churning, it's crucial to take prompt and strategic action. At Weltz Law, we recommend the following steps:

Document Everything

Start by gathering all relevant documentation related to your investment account. This includes:

• Account statements
• Trade confirmations
• Correspondence with your broker (emails, letters, text messages)
• Notes from phone conversations or meetings
• Maintain a detailed record of any suspicious activities or conversations. This documentation will be invaluable in building your case.

Review Your Account Statements Carefully

Scrutinize your account statements for signs of excessive trading. Look for:

• Frequent buying and selling of securities
• High transaction costs
• Declining account value despite stable market conditions

If you're unsure how to interpret your statements, don't worry. Our team at Weltz Law can assist you with this analysis.

Avoid Tipping Off Your Broker

While it's natural to want to confront your broker about your suspicions, we advise against this. Alerting your broker may lead them to attempt to cover their tracks or pressure you into inaction. Instead, continue to interact normally while you seek legal advice.

Seek Professional Legal Advice Immediately

Contact an experienced accounts churning attorney as soon as possible. At Weltz Law, we offer free, confidential consultations to evaluate your case. Early intervention can help preserve evidence and protect your rights.

Consider Freezing Your Account

If you're concerned about ongoing losses, consider requesting that your brokerage firm freeze your account to prevent further trading. However, we recommend consulting with us before taking this step, as it may affect your case.

File a Complaint with FINRA

You can file a complaint with the Financial Industry Regulatory Authority (FINRA). However, navigating this process can be complex. Our attorneys can guide you through this procedure or handle it on your behalf.

Explore Your Legal Options

Once you've consulted with us, we'll help you understand your legal options. These may include:

• Pursuing FINRA arbitration
• Negotiating a settlement with the brokerage firm
• In some cases, filing a lawsuit in court

We'll work with you to determine the best action based on your circumstances.

Act Promptly

Be aware that there are time limitations for filing claims related to account churning. The sooner you take action, the better your chances of a successful resolution.

Protect Your Investments: Act Now

Don't let account churning erode your financial future. If you suspect your broker has engaged in excessive trading, time is of the essence. At Weltz Law, we're ready to fight for your rights and help you recover your losses.

Account Churning Lawyer FAQs

What exactly is account churning?

Account churning occurs when a broker excessively trades in a client's account primarily to generate commissions rather than to benefit the client. This unethical practice violates the broker's fiduciary duty and can result in significant losses for the investor.

How can I tell if my account is being churned?

Signs of account churning include unusually frequent trading, a high turnover ratio, excessive fees or commissions, and declining account value despite stable market conditions. If you're unsure, our experienced attorneys at Weltz Law can review your account activity to determine if churning has occurred.

Is account churning illegal?

Yes, account churning is illegal. It violates federal securities laws and FINRA rules. Brokers found guilty of churning can face severe penalties, including fines, suspension, or revocation of their license.

What is the statute of limitations for account churning claims?

The statute of limitations can vary depending on the specific circumstances and applicable laws. Generally, it's advisable to file a claim within six years of the violation or within two years of its discovery. However, we recommend contacting us as soon as you suspect churning to ensure you don't miss any deadlines.

How much does it cost to hire a securities lawyer?

At Weltz Law, we work on a contingency fee basis for account churning cases. This means you don't pay any attorneys’ fees upfront; we only get paid if we successfully recover compensation for you. Our fee is typically a percentage of the recovery amount.

Can I still pursue a claim if I approved the trades?

Yes, you may still have a valid claim even if you approved the trades. Brokers have a fiduciary duty to act in your best interest, regardless of whether you approved the transactions. If the overall pattern of trading was excessive and primarily benefited the broker, you might have a case for churning.

What kind of compensation can I recover in an account churning case?

If we prove account churning, you may be able to recover:

• Excess commissions and fees paid
• Losses incurred due to unnecessary trades
• Interest on your losses
• In some cases, punitive damages

How long does an account churning case typically take?

The duration of an account churning case can vary widely depending on its complexity and whether it settles or goes to arbitration. Some cases resolve in a few months, while others may take a year or more. We strive to resolve cases as efficiently as possible while still achieving the best outcome for our clients.

Do I have to go to court for an account churning case?

Most account churning cases are resolved through FINRA arbitration rather than in court. This process is generally faster and less formal than a court trial. Our attorneys at Weltz Law are experienced in FINRA arbitration and will guide you through every step of the process.

What if my broker denies churning my account?

It's common for brokers to deny allegations of churning. That's why it's crucial to have experienced legal representation. At Weltz Law, we know how to gather and present evidence to prove churning, even in the face of denials. We'll thoroughly investigate your case and build a strong argument on your behalf.