Churning and Unauthorized Stock Trade

Your stockbroker is never authorized to trade on your behalf without your fully informed approval. Unauthorized trading violates industry regulations and can be the basis for a claim against the broker and the stockbroker's firm.

Churning occurs when your broker convinces you to make multiple trades in a commission account that is not intended for your best interest. Recommendations to buy and sell securities or investment products are typically designed to benefit the stockbroker by generating more commissions at your expense. Churning is a fraudulent scheme designed to generate more commissions. Good disciplined trading with stop losses and profit taking can lead to an increased volume in trading. But if you did not have this discussion prior to an increased volume in trading, then you may be victim of churning.