Churning is a manipulative and deceptive practice in violation that violates Section 10(b), Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010. It is fraudulent conduct that occurs when: (i) a registered representative controls trading activity in an account, (ii) the level of activity in the a...
Excessive buying and selling of securities in an investor's account, also known as churning, is not only unethical, but also violates securities laws. Most, if not all, churning stems from the broker's desire to generate commissions that benefit the broker. For churning to occur, the broker mus...
Long names call for shorthand. Here is a list (by no means exhaustive) of acronyms for investment and finance-related entities, which you might come across in this blog or elsewhere: ACLI – American Council of Life Insurers. ACLI is an association of American life insurance carriers whic...
Investing has its own language, including beloved acronyms and shorthand. Here's a list (by no means exhaustive) of general terms you might hear thrown around in this blog or elsewhere: AUM – assets under management, which is the total market value of the investments that a person or ent...
Working under the supervision of the SEC, one of FINRA's tasks is to write and enforce rules governing the ethical activities of brokerage firms and brokers. With respect to discretion, FINRA Rule 3260(b) (aka NASD Rule 2510(b)) provides that for a broker to exercise discretionary power in a cus...
Merriam-Webster defines discretion as “individual choice or judgment.” In the investment arena, discretion similarly refers to the exercise of judgment. When the customer makes all the trading decisions in the account, then the account is non-discretionary. In contrast, a discretionary account...
Investing is complicated – that's probably the primary reason you chose to work with a broker. Unfortunately, despite one's best efforts, things may have gone disastrously awry. Now, you are sitting down to a late night Google session and attempting to figure out your options. Obviously, when ...
What are the possible signs of fraud or other misconduct in your account? Here are some potential red flags: Big drops in the value of your portfolio, particularly when these dips don't follow the market or seem exaggerated in comparison to what the market is doing. Under-performa...
Thank you for visiting the Farrar Law PLLC site. I intend to provide general information, which should not be construed as legal advice at all. If you are looking for advice on a specific matter, please contact me directly for a free consultation.