Protecting your rights.

Learn about how to protect your rights as an investor. 


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Charles Schwab Stock Losses

The Charles Schwab Corporation was founded in 1971. Originally, the company was named First Commander Corporation. Two years into its existence, the company changed its name to the one it currently has: the Charles Schwab Corporation. This name came from the founder and principle stockholder of the company at the time, Charles R. Schwab. 


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5 Reasons Investors Should Think Twice About Owning Bond Funds

Kyros Law Offices represents investors that have suffered losses due to broker misconduct. Beyond helping investors recover from investment losses, Kyros Law Offices also tries to warn investors of potential harm before it occurs. One area for potential investment losses involves bond fund investments. Here are five reasons why investors should think twice about owning bond funds:

 

1.     Interest rate risk

2.     Credit risk

3.     Redemption risk

4.     Ongoing management fees

5.     Uncertainty regarding what bonds or debt the fund owns.

 

If you have suffered losses of $100,000 or more in your bond fund investments, please call one of our securities attorneys to discuss your rights. 1-800-934-2921

Churning

 Churning occurs when a broker excessively trades an investor’s account to generate fees, commissions, or markups.

Whether the stock market is up or down, churning victims may have potential FINRA arbitration claims against their broker and broker-dealer.  Excessive trading occurs when a broker has control over the trading in a customer account, and the level of activity in that account is inconsistent with the customer's objectives and financial situation. Courts have held that a broker can assume control over both discretionary and non-discretionary accounts. A broker who does not have formal discretionary authority may still exercise de facto control over an account to substantiate a churning claim. This control is established when the customer simply follows the broker’s recommendations without exercising any independent review. Those customers simply place their trust and faith in their broker’s advice or recommendations. An account with a high level of trading activity is evidence of the broker’s de facto control over an account.

Determining if you're a victim of churning

In order to determine whether your account has been churned, an analysis of your account’s annualized turnover ratio (ATR) is performed. Annualized turnover ratios are calculated by dividing the total purchases in the account by the average equity in the account and then multiplying that number by the total number of months the account was traded, divided by 12. Courts have found accounts with an annualized turnover ratio as low as 2 to be considered presumptive churning. Even if the annualized turnover ratios do not give rise to prima facie churning, active trading strategies that generate fees for the broker and broker-dealer may be unsuitable for an investor’s needs, investment goals, and risk tolerance. Certain broker-dealers condone such activity for a number of reasons. First, the trades generate fees, commissions, and markups. Second, when broker-dealers act as a market maker for the securities that are sold, broker-dealers can charge excessive mark ups on transactions (out of the firm’s own inventory of stock) netting broker-dealers huge profits off of an investor’s savings. Many investors do not know or understand that they are being charged markups on the shares they are buying or selling. Unsuspecting investors may be paying markups in excess of $1 per share on trades involving thousands of shares of stocks.

Excessive fees, commissions, and markups have a dramatic impact on investment performance. Another way to determine whether the trading in your account is excessive is to determine the cost to equity ratio in the account. This analysis highlights the account performance necessary to offset the fees, commissions, and markups being charged in the account. For example, if an investor with an account with average equity of $100,000 is charged $15,000 in fees, commissions, and markups in a given year, that investor’s account would have to generate 15% returns just to break even for what fees, commissions, and markups they were charged. It is important that investors understand that many investment professionals will only charge a flat 1% fee for all trades and account management in any given year (or $14,000 less in the example above). Not surprising, accounts that are passively managed, or that are not being charged excessive fees generally outperform those accounts with high cost to equity ratios.

If your account is declining or failing to keep up with advancing markets, you may have a churning claim and be entitled to financial compensation. 

Lost money because of your stockbroker's churning?

We will fight to help you get your money back. If you have lost over $100,000 due to stockbroker fraud, contact us to protect your rights. Complete the form on this page or call 1-800-934-2921 for a free no obligation consultation with a lawyer. We work on a contingency basis, so rest assured that there will never be an out of pocket expense to you.