Securities is a risky business for Colorado residents to be involved in — regardless if one is a broker or portfolio manager in charge of trading or a client who is trying to meet certain investment goals. A number of things can go wrong; being accused of or being a victim of churning is just one of them. No matter what side of the fence one sits in a securities litigation case involving churning, legal counsel can help one achieve the best outcome possible.
Churning occurs when a broker or portfolio manager makes excessive trades to generate commissions. These trades are of no benefit to his or her client; in fact, it may cost a client a lot of money. It is just a way for a person in one of these positions to make more money for him or herself.
If accused of overtrading, a broker or portfolio manager may be able to clear his or her name if it is possible to provide evidence that suggests the trades were made in good faith and for the benefit of the client. If such evidence does not exist or what is offered up is insufficient, one may be found guilty of churning. This can result in the loss of employment, ban from the industry, an order to pay fines and various other legal ramifications.
If one is a victim of churning, the records of all the trades made on one’s account with the lack of investment growth may be all that is needed to have one’s broker/portfolio manager charged and convicted of this crime. If excessive trading is suspected, one can file a complaint with the Securities and Exchange Commission or the Financial Industry Regulatory Authority. If the complaint proves to work in one’s favor, it may be possible to achieve compensation for any losses experienced because of the actions of one’s account manager.
Accusations of churning are serious and need to be approached in the right manner. Any misstep could harm one’s case. If one is accused of or a victim of overtrading, a Colorado-based securities litigation attorney can help tackle the issue quickly, quietly and head-on.