Excessive Activity

Brokers have a duty to place their clients' interests ahead of their own. When a broker engages in excessive activity, typically for the purpose of generating additional commissions, the broker violates that duty. This violation means that both the broker and the brokerage firm may be held liable for any losses that arise out of such excessiveness.

Excessiveness is typically determined by evaluating your account's annual turnover rate and the "break even" or "cost-equity" ratio of the account. According to both the SEC and the courts, a turnover rate of over 6% is excessive per se. However, with a vast majority of standard turnover rates being below 1%, excessive activity may be proven at a significantly lower rate. Standards also exist that determine that most accounts requiring at least a 15% annual return to "break even" meet the definition of "excessively traded."

However, even if it can be established that your account has experienced excessive activity, for liability to exist, it must be proven that the broker had effective control of your account. Proof of control may be established through a written document granting the broker control of your account or by showing that you relied so completely on the advice and recommendations of your broker that the broker was effectively responsible for the number of transactions in your account and their frequency.

To ensure your excessive activity claim is handled effectively, you need the assistance of a law firm nationally recognized for its professional excellence. With over fifty years of combined legal experience, and having successfully represented over 800 individual and institutional investors, the securities arbitration lawyers at Meyer Wilson have the expertise, experience and resources necessary to review, investigate and aggressively pursue your stockbroker misconduct claim.

We have won hundreds of millions of dollars in losses for clients nationwide, including in cities such as Cleveland, Los Angeles, San Diego, Dallas and Tampa. For assistance with your excessive activity claim, call us toll-free at 1.866.827.6537 or complete our online form for a free case evaluation.