noun
General Slang
Churning
· noun · finance
A broker over-trading a client's account just to harvest commissions.
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Definitions
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Excessive trading in a customer's account by a broker whose real motivation is the commission on every ticket, not the client's investment goals. Illegal under SEC and FINRA rules. The tell is high turnover with no coherent strategy, the account bleeding fees while the broker pads his number.
“She sued her broker for churning, 200 trades in a year on a retirement account.”
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Churning In A Sentence
She sued her broker for churning, 200 trades in a year on a retirement account.
Origin & Usage
People Also Ask
What does churning mean in finance?
Churning is when a broker over-trades a client's account purely to harvest commissions.
Is churning illegal?
Yes — trading a client's account excessively just to generate commissions is a prohibited practice in the securities industry.
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