Churning Lawyer

Hire a top-rated and experienced investment fraud lawyer at Patil Law after you or your loved one has suffered from account churning and other fraudulent investment practices.

The law firm’s founder, Chetan Patil, has over 15 years of extensive experience in diverse, complex disputes and transactions across the country. To date, Patil Law has recovered over $25 million on behalf of its clients.

One of the most notable lawsuits involved a $5 million settlement for clients who were improperly sold multiple illiquid Real Estate Investment Trusts (REITs) and who were victims of forgery. Feel free to browse through the firm’s impeccable track record.

Chetan specializes in litigations, trials, arbitrations, and appeals of complex securities, Financial Industry Regulatory Authority (FINRA) cases, and financial and business disputes, with an emphasis on securities, financial services, and financial regulatory law.

Why Choose Patil Law?

Patil Law’s clients will benefit from the depth and breadth of Chetan’s legal experience and judgment. He has handled and overseen over a thousand litigation and arbitration cases nationwide in federal and state courts and arbitration forums.

As a testament to their deep care and commitment, Chetan and his team of legal experts travel extensively for their clients all around the country.

They have represented defrauded investors, family trusts, family offices, public and private companies of all kinds, including banks and other financial institutions, broker-dealers, registered investment advisors, advisory firms, and securities brokers.

How Much Do We Charge: We believe in accessible justice. Thus, we operate on a contingency fee arrangement. You do not pay any legal fees upfront. We only get paid if we secure a favorable settlement or verdict for our clients.

Contact Us Now: If you or a loved one has been a victim of churning or other types of investment fraud, you don’t have to stay silent anymore. Patil Law is here to help you fearlessly pursue justice and compensation against those who have wronged and scammed you for your hard-earned money.

Call us now at (800) 950-6553 or send us a message through our secure and confidential online form. Our team of compassionate professionals is always on standby to provide immediate assistance.

What is Account Churning?

The U.S. Securities and Exchange Commission (SEC) defined “account churning” as an abusive sales practice in which unethical securities professionals make unnecessary or excessive trades in order to generate commissions.

Most churning occurs when a broker has the discretion to trade the account. In such cases, it is not necessary that the broker receive prior approval from the client to complete a transaction.

When investors aren’t careful to diligently review their monthly account statements, they’d be unaware that their broker had performed abnormally high trading activities at the former’s expense.

Warning Signs of Account Churning

If you have an investment broker or advisor who works on commission, it’s only reasonable to expect that they will be diligent in performing their duties. Unfortunately, there are those who take advantage of the technical aspects of the market and abuse their clients’ trust.

If you have given your broker express or implied control over your account, or your broker has simply taken control of your account, you may be a prime target for illegal financial activities. These are some of the major warning signs of account churning:

Abnormally High Trading Activity

Federal regulations require your broker to send a written confirmation of every transaction they make for your benefit. If you receive daily or weekly trading confirmations and you didn’t sign up as an active trader, then your broker might be churning your account.

Additionally, this becomes more likely if you didn’t sign a document giving the broker your explicit permission to trade in your account and your broker is not discussing each trade with you.

Declining Account In An Upward Market

Another sign that you’ve been a victim of churning is your portfolio’s performance in contrast to the prevailing market. If your account is declining despite the latter’s upward movement, it may be due to the commissions resulting from your broker’s excessive trading.

One way to avoid this is to pay close attention to all the documents you receive from your broker and stay on top of how your account’s performance.

Switching Mutual Funds And Annuities

Mutual funds and annuities are typically not meant to be frequently swapped for other investments of the same type. Quick sales shortly after purchase may signal a broker’s attempt to maximize their commissions.

You might receive what appears to be a routine form to sign off on the switch. However, it’s important to approach these trades with caution. Excessive swapping could be a red flag that your account is being churned.

Requirements Of A Churning Case

If you’ve been a victim of account churning, you may bring a lawsuit or arbitration against your broker. There are three crucial elements that you must establish for your case to have a favorable outcome:

  1. That your broker had control over your account, which can either be express or implied control. Express control can be proved through a signed agreement between the parties. On the other hand, implied control is where the broker had an excessive influence on your judgment.
  2. That your account experienced excessive trading. This would involve many factors, such as the size of your account, your financial goals, the turnover ratio, the commission-to-equity ratio, and other calculations. An expert witness with special knowledge of investing can help prove whether the trading constituted churning.
  3. That there was intent to defraud. Your broker must have either specifically intended to defraud you or acted with reckless disregard for your interest.

Legal Remedies of Churning Victims

When investors fall victim to account churning, understanding their legal remedies becomes crucial. It’s important to know these essential actions that you can pursue:

Investors who believe they have been a victim of churning can file a complaint with either the SEC or FINRA. The SEC looks into complaints about brokers who appear to be putting their own interests over that of their clients. Moreover, brokers who overtrade may be in breach of SEC Rule 15c1-7, which governs manipulative and deceptive conduct.

On the other hand, FINRA Rule 2111 requires that brokers have a reasonable basis to believe that a particular transaction is suitable for the intended client.

This particular rule has been interpreted to prohibit account churning since the primary purpose of account churning is to enrich the broker at the expense of the investor.  Moreover, the New York Stock Exchange (NYSE) prohibits the practice under Rule 408(c).

Since it’s a serious offense, churning can lead to employment termination, suspension, being banned from the industry, and legal consequences for the erring broker. FINRA may also impose a fine ranging from $5,000 to $116,000.

As for the personal recovery of your losses, it’s best to consult with a seasoned investment fraud lawyer to explore the different avenues of mediation, arbitration, or civil lawsuits.

Contact An Experienced Churning Lawyer Now

Hire a reputable investment fraud lawyer at Patil Law to fight for your rights as you focus on your financial recovery. Churning is a serious financial offense with harsh consequences that can impact an investor’s life.

At Patil Law, we have vast resources and a formidable network of legal and financial experts who can investigate and pursue account churning claims on behalf of our clients. You can trust that we’ll stop at nothing to recover your losses and damages.

All hope is not lost. Call us now at (800) 950-6553 for a free consultation, or send us a message through our secure and confidential online form.