Churning is excessive trading in a customer’s account by a broker taken in the context of the customer’s financial situation and investment objectives. While no one test is available to determine if an account has been churned, churning requires three elements, first, excessive trading, and second, control of the account by the Registered Representative, and three intent to defraud the customer. The intent element is difficult to prove, but will typically be proven by the establishment of the first two elements.
Read the full article: Churned or Traded? – Securities Law Home Page