Once the Financial Professional understands your objectives, an investment strategy for some or all of your portfolio should be established. In making various recommendations, the Financial Professional must properly describe and not understate the risks associated with the suggested categories and particular investments.

Your portfolio should be reviewed from time to time to ensure the respective investments are performing as intended and adjusted when it appears that an investment is not meeting expectations. But keep in mind that while a financial professional must have a reasonable basis to recommend the purchase, sale or exchange of a security, they do not have an obligation to recommend that you sell an investment. In a non-discretionary account, you are responsible for deciding when to sell, even if from time to time your financial professional makes such recommendations.

The broker may fail to make appropriate recommendations because he or she has not learned the essential facts about a customer or not understood and the nature and risks of a recommended investment; thereby misrepresenting such risks. A Financial Professional may make unsuitable investment recommendations for a variety of reasons, among these are: selling you a particular investment for a greater commission, selling one security to buy another security simply to earn two commissions or generating commissions from excessive transactions which provide little to no benefit to the customer.

Such excessive trading or “churning” involves the following:

• Excessive trading;
• Where the Financial Professional has “legal” control of our account;
• For the purpose of generating commissions with little or not benefit to you.

While churning is subject to interpretation in each instance, there are guidelines set forth by federal, state and industry regulators, enforcement actions and other authoritative sources which help establish whether your account has been churned. Other factors which must be considered include: management supervision and the Financial Professional record of complaints and/or disciplinary history. Since the issues which must be taken into consideration to determine unsuitable trading are complex, you want a securities arbitration lawyer with decades of experience as a regulator, in-house and outside counsel, general counsel and as a private practitioner, who has tried over 125 securities arbitration proceedings.