Churn

Finance allah shmoop What does it mean to churn an

account All right Well back in colonial times before america

was the good old u s a You know what

That i po and seventeen seventy six colonists would churn

cream into butter back then churning involved moving a plunger

in a wood bucket over and over and over again

Really good for the traps and lattes there Not exciting

but well that's What happens when there's No better technology

today churning is something illegal that stock brokers dio and

remember normally brokers pay their own rent by getting paid

a commission off of each trade they do for customers

So churning in the financial sense here means that stockbrokers

are making tons of trades they really don't need to

be making in a client's account in order to generate

mohr commission for themselves they're churning the account to generate

dough for themselves Illegal very bad And sometimes it can

be difficult to detect or stop You know think about

little old ladies not really paying attention to our account

or ah cardiologists who really has no idea how wall

street works They have no idea of the brokers churning

Or not Well if you fall prey to a broker

who's involved in churning you'll end up overpaying them in

commissions And you might even have to pay extra taxes

because they realized gains from all those trades they didn't

need to make But if that brokered does get caught 00:01:26.979 --> [endTime] yeah he's toast