After realizing you’ve been a victim of churning in California, you may be hurt, angry, and embarrassed. It is not only unethical for a financial advisor not to act in your best interest, but it can also feel like a personal betrayal. A California investment lawyer from Meyer Wilson Werning can help.
If a financial professional loses your money due to excessive trading or “churning,” one of our California investment fraud lawyers can evaluate your case during a free consultation. If we are able to move forward, our lawyers will identify the liable party, gather evidence, and pursue a financial award on your behalf.
Our excessive trading/churning lawyers in California are here to help you reclaim your future and hold the at-fault advisor or securities firm accountable. Call or fill out the online form to get started.
How Financial Advisors and Brokers Churn Investments
Excessive trading, also known as investment churning/churning investments, is a deceptive tactic used by some financial professionals to generate more commissions at the expense of their clients. This practice can lead to severe financial losses for clients.
Churning could lead to civil penalties and is also illegal, according to the U.S. Securities and Exchange Commission (SEC). The SEC defines churning as any securities purchase or sale by a financial advisor, broker, or municipal securities dealer that is excessive in size or frequency according to the circumstances of the account as fraud.
Although an advisor or broker may trade securities if it is in the client’s best interests, it is misconduct for them to do so solely to generate commissions. It is only considered churning if the person or entity guilty of this misconduct had control over the investment decisions within the client’s account at the time of the trading.
How Investment Advisors Try to Hide Churning
In an attempt to conceal churning, financial advisors and firms commonly categorize the investment strategy for the brokerage account as “speculation,” aligning with a “high” or “aggressive” risk tolerance. Financial planners and firms try to justify their actions by asserting that the customer willingly accepted these risks and actively pursued such trading.
However, financial planners and brokerage firms are obligated to demonstrate that recommended trading strategies prioritize each customer’s best interests and adhere to securities industry regulations. Even if a client’s investment objectives specify aggressive risk tolerance, an investigation may reveal activities conflicting with the investor’s best interests.
No investor approves of their account being manipulated solely for the advisor’s gain, regardless of their risk tolerance level. If you believe you have a case of churning, you may be eligible for financial compensation from the unscrupulous adviser. Our investment fraud attorneys are nationwide leaders in this practice area and know how to get justice in these cases.
How to Detect Churning Activity as an Investor
Are you unsure whether your advisor is churning investments in your portfolio? Take a closer look at your financial statements to uncover potential red flags. Advisors might obscure churning by holding onto underperforming investments while disposing of profitable ones.
This deceptive strategy can give the appearance of portfolio growth, concealing the adverse effects of frequent commissions and subpar investment choices.
Stay vigilant for the following telltale signs of advisor or broker misconduct:
- Excessive trading activity or unnecessary trades
- Unauthorized trading
- Unexpected fees and commissions
- High turnover rate
- Lack of communication
- Unsuitable investments
- Lack of diversification
- Poor performance overall
If you notice any of these indicators, it’s crucial to seek guidance from an experienced churning attorney in California to protect your financial interests.
Time Limit for Taking Legal Action to Recover Investment Losses
In California, depending on the circumstances, you have only three years from the date you discovered the fraud, or the date you reasonably should have discovered it, or five years from the violation date (whichever expires first ) to bring your civil lawsuit in court against an advisor and/or investment firm.
Cal. Code Civ. Proc. 338 outlines this time limit. However, certain exceptions may alter the deadline, so contact a lawyer as soon as possible if you believe a financial professional took advantage of you. In addition, the time limits may be different if your case is pursued in mandatory arbitration before the Financial Industry Regulatory Authority (FINRA).
How We Help Clients in California Excessive Trading/Churning Cases
The easiest way to pursue compensation after discovering churning is to hire an attorney from Meyer Wilson Werning. Our churning lawyers in California have spent years standing up for victims of financial fraud and can help you work through your case.
Here are a few of the ways we stand out from our competitors:
- Our law firm has spent more than 20 years successfully helping clients recover financial losses they suffered due to advisor misconduct.
- Our lawyers are proud to have more than a 98% success rate with the cases they accept. We have earned more than $350 million in total for our past clients.
- Our law firm has extensive resources to help you fight against an advisor who is churning stocks or other securities. These resources include relationships with mediators, securities regulators, and expert witnesses in California.
- Our investment and securities fraud lawyers operate on a contingency fee basis. That means we will only charge you if we get you a financial award.
Our team stands ready to provide comprehensive support. We are here to advise you of your legal options, gather additional evidence to build your stock churning case, and represent you in FINRA arbitration or other appropriate resolution methods.
Contact a California Churning Attorney Today
Churning could cost an investor thousands of dollars while the advisor still earns a profit in commissions. At Meyer Wilson Werning, we are passionate about protecting vulnerable clients from this kind of fraud and deceit.
Our California excessive trading/churning lawyers have committed their professional lives to preventing these crimes and assisting victims in bringing civil lawsuits. We may be able to help you as well.
Discuss your case with an experienced attorney during a free consultation at our California law office. You have a limited time to take legal action, so don’t wait. Call or fill out our contact form to get started.