Churning

Churning refers to excessive buying and selling in your account by your broker. For churning to occur, your broker must exercise control over the investment decisions in your account, either through a formal written discretionary agreement or otherwise, and must engage in excessive trading in light of the financial resources and character of the account for the purpose of generating commissions.

The major securities industry self-regulatory organizations have rules prohibiting churning. You'll find the NASD's churning rule – Rule 2310-2(b)(2) – in the "NASD Manual." To request a copy of the New York Stock Exchange's churning rule – Rule 408(c) – please call the NYSE at (212) 656-2744.

If you believe your broker has churned your account or engaged in another sales practice abuse, please send us your complaint using our online complaint form.

http://www.sec.gov/answers/churning.htm