Churning

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Personal Finance

Excessive buying and selling in a customer's account undertaken to generate commissions for the broker.

If a broker intentionally mishandles buying and selling securities in your investment account, it's known as churning.

The broker might buy and sell securities at an excessive rate, or at a rate that's inconsistent with your investment goals or the amount of money you have invested.

One indication of potential churning is that you're paying more in commissions than you are earning on your investments. Churning is illegal but is often hard to prove.

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