Churning

Some level of buying and selling the securities in an account is normal and expected. However, brokers are typically paid every time a security in an investor's account is bought or sold. Churning is when a broker is buying and selling securities in an investor's account in order to generate commissions for him or herself, rather than doing what is best for the investor. There is not a specific amount of trading which is automatically too much, but more trading in an account equals higher risk. Where a broker is engaging in churning commissions, both the broker and his company can potentially be liable for the losses that the investor suffers as a result.