BS Ethics EX 2 Q 6 - would be an act of churning. If I were...

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BS Ethics, BBA 4751-04D James Tilley, Section II Exam, Q 6 Churning is when a broker controls a client’s account and conducts excessive or inappropriate trading on their client’s behalf with the intent to generate commissions. The reason it is ethical objectionable goes against the brokers fiduciary duty to trade in ways other than in the clients best interests. I am going to use myself as my example. I have two mutual funds that are managed by brokers. If the brokers were to begin making trades that only benefited themselves through commissions regardless of my loss or gain
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Unformatted text preview: would be an act of churning. If I were a victim of churning I would want my broker or the firm to reimburse me for my loss. If I made a profit then a sensible person would want to keep the gain. Some other ways to deter churning is to prohibit sales contests for certain products. The commission would be based upon the size of their clients account being managed. Stop allowing higher commissions for a companys own products....
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This note was uploaded on 10/21/2011 for the course BBA BBA2401 taught by Professor Profmicketonsert during the Spring '11 term at Columbia Southern University, Orange Beach.

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