What to Do if Your Financial Advisor is Churning Your Account
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As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
Trade churning is a serious problem for many investors. You place your accounts in the hands of a financial advisor or broker, trusting them to grow your money and keep the account costs and fees low. However, some advisors will take advantage of this trust and force multiple, repetitive trades to drive up their transaction fees. If your advisor or broker is churning your account, what should you do? The trade churning lawyers at Epperson and Greenidge, LLP explain your next steps.
What to Do When You Discover Trade Churning
If your investment account’s fees and transaction costs have recently gone up, or you notice a high number of unnecessary or unsuitable investments, you may be the victim of trade churning. These problems, if left unchecked, could continue. There are multiple tools you can use to stop churning once you discover it.
First, you should talk to your financial advisor. Calling them out on the unnecessary or frequent trading might be enough to stop them if they know that you caught them. You should give them clear and concise instructions not to make any more trades without express permission. If they work for an investment firm, you should ask to have your accounts transferred to another advisor and consider switching firms entirely. Any further trade churning could be considered unauthorized trades or breach of contract if they continue to rack up fees on your account after you explicitly tell them to stop.
After you’ve taken action to try to stop the trade churning, you should notify others of the issue. Report what happened to your financial advisor’s supervisor or someone else at their firm. In addition, both the SEC (Securities and Exchange Commission) and FINRA (the Financial Industry Regulatory Authority) have rules against trade churning. Both organizations also accept complaints against broker-dealers who perform these kinds of illegal and unethical activities so that they can take disciplinary action against them.
On top of reporting your advisor, you can retain an attorney to help you hold them accountable and get compensation for the harm you suffered. These unnecessary fees and transaction costs can cause serious financial harm, and they are wholly your advisor’s fault. FINRA allows injured investors to file claims against licensed broker-dealers for FINRA arbitration. FINRA arbitration lawyers like those at Epperson and Greenidge can help you take your claim to a hearing and get compensation from the broker or financial firm that churned your accounts.
How to Recognize Trade Churning
Before you can file a complaint or arbitration claim for the harm trade churning caused you, you need to discover the churning in the first place. If your advisor is churning your accounts, it can be difficult to understand when they’ve crossed the line. These tips can help you recognize trade churning and know when to step in and stop the harm.
The best way to discover trade churning is to check your account statements. You should receive notice of any trades made on your account. Trades that you specifically authorize are simple enough to keep a record of, but many investment accounts give authorization over to your financial advisor to make investment decisions for you. In most cases, your advisor can buy or sell investment products without specific authorization, as long as they continue to work toward your goals. You should still receive a record of any of these trades and their fees.
If your account statements and reports show increased activity, you might be a victim of trade churning. Some frequent trades might be justified, but it is important to look at the timing of these trades and the associated fees. If these trades are very close together or your records show the same product was bought and sold multiple times in a short period, this is likely a sign of trade churning. Moreover, if your transaction fees end up costing more than the investments are benefitting your account, this is solid evidence that your advisor or broker is doing something wrong.
If at any point you think you might be the victim of trade churning, you can contact an attorney. Many attorneys, including the FINRA claims attorneys at Epperson and Greenidge, offer free consultations to help you understand if you have a case. Our attorneys can look at your records and help you determine whether you might be the victim of illegal advising practices and what sort of claim you might be able to file.
Free Consultations on FINRA Claims for Trade Churning Victims
If you or a loved one has seen increased activity or unnecessarily frequent trades on their investment accounts, talk to a lawyer today. The FINRA claims lawyers at Epperson and Greenidge can help you understand if you’ve been the victim of trade churning and work to get compensation for your claims. To schedule a free consultation on your case and get more information on how the FINRA arbitration process works, contact our law offices today at (877) 445-9261.