Series 63: 5.7.1. Excessive Trading

5.7.1. Excessive Trading

There’s no more classic, blatant conflict of interest and ethical violation than excessive trading. Often referred to as churning, this ethical violation involves a professional recommending or making trades in a customer’s account simply for the sake of generating revenue. In plain English, recommending or making a trade simply to generate a commission is unethical.

At the core of this is the most basic conflict of interest in the securities industry—the client’s net worth versus the professional’s net worth. Simply put, whenever a securities professional recommends or makes a trade for a client, the professional must ha