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Friday Q&A - A Trading Account has accused me of Churning!

By Mark H. Astarita, Esq.

Question: For a number of years I had a very active client, who traded frequently, multiple times in a week. Most of the investment ideas were his, but some where mine, and we spoke constantly about the activity and the trades. I provided him with deep discounts on commissions, and followed his instructions, but now he is claiming that I churned his account! What can I do to defend myself and to prevent this from happening again.Answer: First, and this has become a near mantra for me, you need to document your conversations, and activities in the account. While this may not help with this particular account, keeping notes about your customers will help to prevent this type of claim, and will help in the defense of the claim should it arise. The first column that I wrote for Research Magazine was on keeping records, and is a must read for every registered representative - For the Record...continue to full post

Full post as published by SECLaw.com on March 27, 2009 (boomark / email).