Churning/Twisting
San Antonio Broker Fraud Lawyers – (210) 298-6666 - (800) 519-2800
Unscrupulous individuals are always looking for a way to cheat the system. However, while a financial advisor or broker may appear to be acting in the best interest of a client most of the time, careful attention needs to be administered in order to determine whether or not that broker’s intentions are at all affected by their own financial gain. That is, the acts of churning and twisting are two such practices in which brokers commit to securities and annuities transactions with the intent not to make their client profit, but to charge their client as much as possible via commissions.
Churning is a negligent advisor practice that is characterized by the overly excessive purchase and sale of securities and annuities not to make clients a profit, but to generate excessive brokerage fees in order obtain as much compensation as possible via one individual client. The act of churning represents a breach of fiduciary duty, and can be considered negligent business practice on the part of financial advisors and stock brokers. Churning completely disregards a client’s portfolio’s well-being.
Another such practice similar in nature to churning is referred to as twisting, in which the overly excessive purchase of annuities results in greater generated commissions, thus increasing broker compensation while at the same time disregarding an individual client’s investment objectives. Even though these purchases and sales of annuities may result in a profit of some kind for the investor, the underlying reasoning behind them is deceptive broker profit that can significantly impair a portfolio’s overall value, especially since surrender charges tend to be so high.
Financial advisors and brokers have duty to uphold to clients. That duty clearly states that the best interests of the client are taken into account at all times, and that client directed objectives are adhered to. Any breach of this duty is representative of negligent action, and advisors and brokers guilty of such can be held accountable for these actions in a court of law. For all investors affected by churning or twisting, the best course of action always involves retaining the services of an experienced Texas securities fraud layer who will seek to restore investor rights.
At Cichowski & Gonzalez, P.C., our Texas churning fraud attorneys will examine the circumstances in which you were deceived, and will build a strong case against negligent brokers and advisors. For more information and a free initial consultation, please don’t hesitate to contact our Texas securities fraud attorneys today at 800-519-2800.