What Are Unauthorized Trading, Churning, and Overconcentration Cases? - Transcript

Trading cases churning cases and over concentration cases or what I call the too much cases.

Okay so in unauthorized trading cases you have too much trust in your broker and you’re letting them do whatever they want and they’re not asking you they’re just doing and trading without discretion in your account.

And you should never let that happen because if you want to give them discretion you should execute contracts with them because then their firm will review the case with an eye towards the fact that you have not been consulted in those Investments.

The churning cases is your broker’s doing too much trading so they’re trading more for their own commissions um than they are for what is in your best interest.

So you always have to be mindful that it could be the number of trades or the Commission in one trade and the over concentration is too much of one thing and you have to be really careful of that even if a sector seems to be doing really well tomorrow it might not be and so if you have too much of one thing and you’re not Diversified your portfolio could really swing in a down market and you have to be leery why is this person putting me in so much oil and gas or so much technology.

The riskier the positions the higher the commissions so you have to remember that there may be an ulterior motive to over concentrating you in a sector it’s not in your best interest to have too much of anything.