Investor Claim Blog

Helping Investors Determine Whether It's Just the Market or Misconduct is Afoot

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Churning is a manipulative and deceptive practice in violation that violates Section 10(b), Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010. It is fraudulent conduct that occurs when: (i) a registered representative controls trading activity in an account, (ii) the level of activity in the account is inconsistent with the customer’s objectives and financial situation, and (iii)

Excessive buying and selling of securities in an investor’s account, also known as churning, is not only unethical, but also violates securities laws.  Most, if not all, churning stems from the broker’s desire to generate commissions that benefit the broker.  For churning to occur, the broker must exercise control over the investment decisions in the

Long names call for shorthand.  Here is a list (by no means exhaustive) of acronyms for investment and finance-related entities, which you might come across in this blog or elsewhere:

  • ACLI – American Council of Life Insurers. ACLI is an association of American life insurance carriers which promotes the life insurance industry to the public

Working under the supervision of the SEC, one of FINRA’s tasks is to write and enforce rules governing the ethical activities of brokerage firms and brokers.  With respect to discretion, FINRA Rule 3260(b) (aka NASD Rule 2510(b)) provides that for a broker to exercise discretionary power in a customer’s account, the customer must provide prior

Merriam-Webster defines discretion as “individual choice or judgment.”  In the investment arena, discretion similarly refers to the exercise of judgment.  When the customer makes all the trading decisions in the account, then the account is non-discretionary.  In contrast, a discretionary account is one where the customer has given the broker written authority to buy and sell

What are the possible signs of fraud or other misconduct in your account?  Here are some potential red flags:

  • Big drops in the value of your portfolio, particularly when these dips don’t follow the market or seem exaggerated in comparison to what the market is doing.
  • Under-performance of the portfolio compared to the market. While