Churning - sustany/dvg GitHub Wiki

Churning is an unethical business practice by some stock brokers which occurs when a broker, exercising control over the volume and frequency of trades, abuses their customer�s confidence for personal gain by initiating transactions that are excessive in view of the character of account and the customer�s objectives as expressed to the broker. As a matter of law, churning is considered a violation of federal securities law proscribing fraud in connection with the purchase and sale of securities. Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful to �use or employ, in connection with the purchase or sale of any security� a �manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.� 15 U.S.C. � 78j(b).�