Business / Commercial Litigation

Securities Churning Claims Lawyers

To understand churning you must first understand that one way a stockbroker may be compensated is on the volume of transactions conducted for a customer. When a stockbroker puts his or her own interests ahead of the interests of the customer by effecting trades that are “excessive in light of the objectives and resources of the customer’s account,” the broker is churning the account.

You can protect yourself from “churning” by limiting the stockbroker’s authority to engage in discretionary trading. Make it clear what you want and be very careful when signing any activity letters for your accounts. Unless you fully understand the nature of all the transactions executed in your account, do not sign anything without consulting an attorney first.

Tips to Determine if Your Account Has Been Churned:

The Turnover Ratio

Various methods are used to determine whether an account has been churned. The most common test of churning is to compute the turnover ratio. The turnover ratio can be calculated by dividing the average net equity into the aggregate amount of purchases over a given period of time. Although there is no fixed number which will establish churning, it has generally been found that an annual turnover ratio of six or more suggests excessive trading.

The Break-even Ratio

Another tool in evaluating churning is the commission-to-equity comparison or break-even ratio. This calculation will demonstrate how much the value of the account would need to appreciate just to compensate for the commission charged to it. This ratio can be derived by dividing the total commissions by the average equity over a specified period of time.

Losses in the account are not a necessary element of churning since churning serves to reduce profits which otherwise may have been earned. The intent on the part of the broker to defraud must also be demonstrated. Generally, once control has been established, intent will be inferred by the conduct (excessive trading) of the broker.

If you believe that your stockbroker may have churned your investment account or that you may have been a victim of any type of securities fraud, you have certain rights which you should be aware of, rights which may provide you an opportunity to recover your losses from your stockbroker or brokerage firm.

We can help. Our stock fraud lawyers represent victims of churning and other types of stock fraud. We’ll evaluate your claim for free and won’t charge you any attorneys’ fees unless and until we win or settle your claim. Please contact us today.

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BURG SIMPSON: “BEST LAW FIRM 2020” RECIPIENT ABOUT THE “BEST LAW FIRMS” LIST U.S. News & World Report and Best Lawyers cooperatively released its tenth annual list of “Best Law Firms” rankings. Burg Simpson was included as a #1 National Ranked law firm for Mass Tort Litigation & Class Action suits. Firms included in the 2020 Edition of… Read more »

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Burg Simpson’s Colorado mass tort attorneys have represented thousands of people who have suffered serious side effects after taking dangerous medications or those who have been hurt by a defective product.  If you have suffered injuries related to a defective drug or medical device, contact the Burg Simpson mass tort team at 303-790-2525.


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The Jeremy Bitner Foundation was established in honor of Englewood Police Detective Jeremy Bitner. Detective Bitner lost his life in the line of duty on May 28, 2012, after being struck and killed by a vehicle while performing a traffic stop. Jeremy served the Englewood Police Department for 8 years and during that time was assigned… Read more »

The 2019 Burg Simpson Scholarship Awards Dinner

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The 2019 Burg Simpson Scholarship Awards Dinner was held at Maggiano’s on April 25th to recognize the ten winners of the firm’s annual scholarship competition. The firm’s founder Michael Burg, and shareholders Peter Burg and Stephan Marsh presented awards to the 2019 winners! This year’s recipients included Ms. Madison Frotten, Mr. Dale Kim, Ms. McKenna… Read more »

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