Unauthorized Trading

This type of fraud occurs when your stock broker makes trades on your account without your prior authorization. Your stockbroker is never authorized to trade on your behalf without your fully informed approval or without written authorization. Your broker must get your consent before any of your stock is sold or new stock bought. Unauthorized trading violates industry regulations and can be the basis for a claim against the broker and the stockbroker’s firm for breach of fiduciary duty.

Churning

If you notice your broker has bought and sold the same stock two or more times in a month, you may be the victim of excessive trading or churning. Each time a stock is bought or sold, your broker earns a commission, often against your best interests as an investor. If your broker convinces you to make multiple trades in your account or recommends that you swap or flip products such as annuities or mutual funds, which are typically long-term investments, that is not in your best interest. Recommendations to buy and sell securities or investment products are typically designed to benefit the stockbroker by generating commissions at your expense.