As financial markets evolve over time, brokers need to conduct transactions to ensure their clients’ portfolios continue to be in a position. While many brokers seek to protect their clients’ interests, others may engage in excessive trading of your portfolio to generate a large amount of commissions. Others may buy or sell a security without their client’s approval.
If your broker or adviser is churning your account, executing unauthorized trades or is engaging in another form of broker misconduct, Timothy J. Dennin, P.C., on Long Island has a long history of obtaining successful results. Since 1990, we have secured six- and seven-figure awards and settlements against some of the largest investment firms in the United States, including UBS, Merrill Lynch and Charles Schwab.
No matter the size of your portfolio, our tenacious securities lawyer acts quickly to hold brokers who abuse their power accountable for their actions. Call 866-437-9475 to schedule a free consultation at our New York City or Northport offices.
Recognizing The Signs Of Churning
There are two key ratios that can help indicate whether a broker is engaging in churning:
- Turnover ratio: Turnover ratio offers investors insight into how much trading is being conducted in their portfolio. Churning may be present if a broker is turning over a portfolio more than six times annualized.
- Cost-to-equity ratio: The cost-to-equity ratio is calculated by adding together all costs incurred by your portfolio and dividing this sum by the average account equity. If this ratio is in excess of 100 basis points, that can indicate broker misconduct.
Attorney Timothy J. Dennin previously worked as a lawyer for the Securities and Exchange Commission. During that time, and over the course of his more than 25-year career, he has learned how to identify the signs of churning and unauthorized trading.
Mr. Dennin obtained an award in November 2018 after trial of $1.075 million, including punitive damages of $700,000 in a churning case against Legend Securities, Inc., its chief compliance officer and the offending broker. He will take the time to review your portfolio to determine whether your broker is engaged in illegal activity.