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a long-held Rule 10b-5 theory under which excessive trading in an
Churning, according to Winslow and Anderson ["Model for Determining the Excessive Trading Element in Churning Claims," North Carolina Law Review, 6 (January 1990)], involves the excessive trading of investment vehicles.
In fairness, some of that trading is illegal "late trading," while a lot of it is late-day "market timing" that may violate some funds' policies against excessive trading.
Research indicates that these "information failures" cause serious private and social harms, such as excessive cost of capital to intangibles-intensive enterprises, hindering their investment and growth; abnormally high volatility of stock prices, causing undue losses to investors and misallocation of resources in capital markets; systematic biases in managerial decisions; and excessive trading gains to corporate insiders, eroding investors' confidence.
Lanier claims that Weber flagrantly churned her accounts through excessive trading activity between Jan.
It alerts them to the critical changes that they specify, such as price changes or excessive trading volumes.
22) To evaluate excessive trading, various factors usually are addressed by courts, including the turnover rate, the investment objectives of the customer, "in-and-out" trading(23) and the proportion of size of the account to commissions generated.
The Securities and Exchange Commission issued an investor alert on Monday warning investors about excessive trading and churning in brokerage accounts the same day it charged two New York brokers with enriching themselves in such a scheme.
Churning is a fraudulent practice that occurs when a broker engages in excessive trading in order to generate commissions and other revenue without regard to the customer's investment objectives.
Churning involves excessive trading in an account by a broker to generate fees or commissions at the expense of the investor.