Investors have a special relationship with their brokers, based on trust. There has to be a high level of trust involved when an investor gives a broker an okay to use their money in the hopes of making a good profit. The fact is, however, that many brokers have been found to have made trades unethically, which is why today there are many excessive broker trading lawyers to protect the rights of investors who’ve been taken advantage of.
Laws Regarding Excessive Broker Trading
The truth is that some brokers take advantage of the special relationships they have with clients and abuse that special trust. Today there are excessive broker trading lawyers whose work is dedicated to protecting the rights of investors who may be taken advantage of by brokers.
Generating Extra Commissions at a Client’s Expense
Churning is a term that refers to a broker who takes on repeated trades on an account just to generate extra commissions for themselves. These types of trades generally do nothing to generate a profit for the client. This practice often happens when a broker has permission from a client to makes trades at the broker’s discretion.
The other issue with the practice of churning is that it creates a higher break even point for the client, causing them to lose the chance at making a profit once again. Churning is illegal, and any investor who feels they may have been taken advantage of by this kind of practice should seek the advice of a an experienced lawyer.
Investing is a risky business, and small investors lean heavily on the trust they have in their broker. Any broker who willingly breaks from the integrity of their relationship with their client is breaking the law. If you have been a victim of this type of unethical practice, contact an experienced lawyer right away, to ensure that your rights are protected.