The Broker-Dealer Task Force and Office of Investor Education and Advocacy
(OIEA) of the United States Securities and Exchange Commission (SEC)
issued a joint Investor Alert on Monday, January 9 to help educate investors about their brokerage accounts,
specifically about the warning signs of excessive trading and what they
can do if they are notified of an increased level of account activity
by their brokerage firm.
How Can I Identify Excessive Trading?
An important step all investors can take is to consistently review your
online account, trade confirmation and account statements. Some of the
warning signs to look out for include:
Excessive Fees: Pay close attention if certain sections of your portfolio are consistently
generating higher fees, especially if they seem higher than expected.
Frequent Trading: Stay alert for signs of numerous in-and-out sales and purchases of securities
that appear to be inconsistent with your risk tolerance and investment goals.
Unauthorized Trading: Contact your firm immediately if you notice any trades made in your account
that you did not give authorization to your broker to make.
Even if the overall value of your account goes up, that doesn’t mean
that excessive trading didn’t take place. It’s important to
note that your online account, trade confirmations and account statements
don’t contain information on every fee incurred. You will need to
speak with your broker to receive all of the information you need. Any
time you have a question about the reasoning behind a trade or why you
incurred a fee, contact your broker so they can explain.
My Brokerage Firm Alerted Me To High Levels of Trade Activity. What Now?
Brokerage firms may reach out to investors if they notice an increased
volume of trade activity in order to ask that you give your approval for
how your broker is handling your account or to acknowledge that the activity
is acceptable. Even if you are satisfied with the results, you should
take the time to speak with your broker and have them explain:
-What investment return your account need in order to cover the fees generated
through the activity.
-How many transaction fees or commissions you paid over the past month,
-Why the actions your broker took benefits you and helps move you closer
towards your investment objectives.
After speaking with your broker, it may be in your best interest to contact
your brokerage firm’s compliance department or with your broker’s
manager to get a better understanding of the trades made in your account,
and how they fall in line with your risk tolerance and investment goals.
I Believe That My Broker Performed Excessive Trades In My Account. What Can I Do?
If you believe that your broker has engaged in excessive trading, it may
be in your best interest to contact an experienced investment fraud attorney.
At Meyer Wilson, we have helped approximately 1,000 clients over nearly
two decades, and have successfully recovered hundreds of millions of dollars
and verdicts and settlements over that time. Give us a call at one of
our four office locations to speak with a member of our firm, or
fill out our online form to start out with a free case evaluation. Every case we accept is handled on a contingency fee basis, which means
that you won’t be required to pay any legal fees until we help you
recover your losses.