Is your client in a wrap program, despite being a low-volume trader? Read about reverse churning

I work for a dual registered broker-dealer/investment advisor. Recently we underwent an examination and during the exit interview the examiner mentioned that he had some concerns over what he called “reverse churning.” I’m not sure I understand what he was getting at, since I always thought of churning as excessive trading. How can an account be traded too little? It almost sounds like the examiner wants the client to pay more. Can you help make sense of this for me?

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access