When we started on Wall Street decades ago, churning was considered one of the worst offenses a broker could commit. We watched firms dismiss advisors who engaged in this practice without hesitation. Today, the violations continue, and elderly investors remain the primary targets.
What happened at Merrill Lynch
FINRA announced this week that it has fined Merrill Lynch $12 million for supervisory failures that allowed brokers to engage in excessive trading in customer accounts. The violations occurred between 2020 and 2023 across multiple branch offices nationwide.
Regulators found that Merrill Lynch failed to establish adequate supervisory systems to detect and prevent churning activity. The firm’s automated surveillance systems generated alerts, but supervisors routinely dismissed them without proper investigation.
The human cost of excessive trading
The victims in this case were primarily retirees aged 65 and older who had entrusted their life savings to Merrill Lynch advisors. FINRA documented cases where individual accounts lost over $400,000 in retirement assets due to unauthorized trading activity.
Churning generates commissions for brokers while destroying wealth for investors. Each unnecessary trade strips capital from accounts through fees, spreads, and market impact costs.
How churning schemes operate
Brokers engaging in churning typically target accounts held by elderly clients. These investors often lack the financial sophistication to recognize excessive activity and may feel intimidated questioning their advisor.
The trading patterns are clear when you know what to look for. Accounts showing turnover rates exceeding 100% annually warrant immediate scrutiny. Monthly statements with dozens of trades in conservative portfolios signal potential misconduct.
Red flags every investor should recognize
Monitor your account statements for warning signs. High turnover in supposedly buy-and-hold portfolios indicates trouble. Unauthorized trades appearing on your statements require immediate action.
Review your fee disclosures carefully. When commissions appear disproportionate to account value, your broker may be prioritizing their income over your returns.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut has recovered over $520 million for investors harmed by broker misconduct. The firm specializes in cases involving churning, unsuitable investments, and elder financial abuse. Their attorneys include former Wall Street defense lawyers who understand exactly how firms operate to protect profits over people.
The firm maintains a 98% success rate in securities arbitration cases. They have secured favorable awards for hundreds of retirees who lost savings to churning schemes and other broker violations. Their experience spans more than 95 years of combined practice in securities law.
Contact Haselkorn & Thibaut today
If you or someone you know has experienced churning or unauthorized trading at Merrill Lynch or any other brokerage firm, contact Haselkorn & Thibaut immediately. Time limits apply to securities claims, and early action preserves critical evidence.
Phone: 1-888-885-7162
Website: https://htattorneys.com
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as legal advice. Past results do not guarantee future outcomes.
