I'm dealing with a situation and need some guidance.
financial advisor churning account. I've been dealing with this for about 9 weeks now and the situation isn't improving.
I have already tried to resolve this directly but did not get a clear answer.
What are my legal options here? Is it worth pursuing?
Just want to point out — the statute of limitations might be a factor here. In some states it's as short as 1-2 years. Don't sit on this too long.
I specialize in this area of law. Here's my take on the legal issues.
There are several legal theories that could apply here. The strongest is probably the relevant statute, which requires showing actionable.
Before taking legal action, consider sending a formal demand letter. In many cases, this alone resolves the issue.
I've dealt with this before.
In my case, it took about 4-8 months to resolve. The key was filing with the appropriate government agency.
Not a lawyer, but I have direct experience with this.
What worked for me was escalating to a supervisor/manager. It took 1-3 months but was worth it.
Discovered my financial advisor at a major brokerage has been excessive trading (churning) my retirement account. Over 200 trades in one year in what should have been a conservative retirement portfolio. My account lost $45K in commissions and losses while the market went up 15%.
Churning is one of the most well-established securities violations. You likely have claims through FINRA arbitration (mandatory for most brokerage disputes):
Key metrics: Courts and FINRA panels look at (1) turnover ratio (number of times the portfolio was turned over — above 6x annually is presumptive churning), (2) cost-to-equity ratio (annualized costs as a percentage of account equity — above 20% is excessive), and (3) whether trades were suitable for your stated objectives.
For a conservative retirement account with 200+ trades, your case is strong. The advisor also likely violated their suitability obligations (FINRA Rule 2111) and fiduciary duty if they had discretion over the account.
Damages: The typical recovery is the difference between your actual account performance and what a properly managed conservative portfolio would have earned (a "well-managed account" analysis). Plus commissions generated by excessive trading.
FINRA arbitration is faster than court (typically 12-16 months). Securities attorneys usually work on contingency (25-33%). Your brokerage firm is jointly liable for the advisor's misconduct under respondeat superior.