Introduction
For many people, retirement accounts represent a lifetime of hard work. So when that nest egg is abused by the very person entrusted to grow it, the consequences are devastating. That’s what happened to one of our clients, whose account was churned by a stockbroker looking to pad his commission statements — not protect a future.
At Lex Firm Global, we fought for full justice — and won $675,000 in arbitration, plus legal costs.
What Is Churning, and Why Is It Illegal?
Churning occurs when a broker engages in excessive buying and selling of securities in a client’s account solely to generate commissions. In this case, the broker placed dozens of unnecessary trades monthly in a conservative retirement account that was supposed to be low-risk and income-focused.
The result?
- Fees eroded 18% of the portfolio’s value
- Risk exposure far exceeded client tolerance
- Trades often reversed within days, showing no real strategy
This wasn’t just negligence. It was predatory behavior hidden under financial jargon.
How We Built the Case
When the client — a 63-year-old former nurse — noticed mounting losses, she reached out. Our forensic audit showed:
- Over 120 trades in a 12-month period
- High-fee products purchased and sold repeatedly
- No documentation of strategy discussions or suitability reviews
- Trade patterns consistent with revenue targeting, not portfolio growth
We brought the case before FINRA Arbitration, compiling over 200 pages of exhibits. We also consulted a financial planning expert who testified that the broker violated fiduciary responsibility and ignored client directives.
The Outcome
FINRA awarded:
- $675,000 in compensatory damages
- Arbitration costs paid in full
- Broker’s license suspended for 18 months
- A formal letter of censure placed in the public FINRA database
The client is now rebuilding her portfolio — with proper advisory support.