Churning is when a broker engages in unethical and unlawful behaviour by repeatedly exchanging assets in a client's account in order to earn commissions. This can result in substantial losses for the client, who may not even be aware that their broker is churning their account. Churning is a violation of FINRA Rule 2111, which prohibits brokers from engaging in excessive trading for the purpose of generating commissions.If you are concerned that your broker may be churning your account, there are several things you can do to protect yourself. First, review your account statements closely and look for evidence of excessive trading or unauthorized transactions. You should also ask your broker about his or her investment strategy and how it relates to your needs and objectives. If you have any questions or concerns, don't hesitate to contact FINRA or another financial regulatory authority.Ultimately, it is up to each individual investor to protect themselves from potential abuses by their brokers. By being aware of the dangers of churning and taking steps to safeguard against it, you can help ensure that your investments are protected.
