How Does Mutual Fund Switching Hurt Investors?

  • Financial markets and investing as a whole can be quite complex, and even the most seasoned investor is taking a risk with every trade and every investment. It is not uncommon to lose money on the stock market, but if you’ve endured losses that are greater than $100,000, you may need to look into whether your loss was legitimate. 

    Mutual fund switching is one of the most frequent ways a broker can make money without being detected. The problem arises when this misuse of your accounts costs you greatly. Continue reading to learn more about what mutual fund switching is and what you can do to recover your financial losses when you’ve been taken advantage of. 

    The Impact of Mutual Fund Switching

    Mutual funds are supposed to be a longer-term investment. This means that they aren’t meant to be traded the way other types of securities are, and when your broker unnecessarily begins switching mutual funds, it can result in churning, which can then result in a stock loss and illegitimate commissions for the broker. Churning is a U.S. Securities and Exchange Commission (SEC) violation. 

    Steps to Take if You Endured an Investment Loss

    Stock market losses should always be carefully reviewed, and if you uncover excessive or unnecessary trades, you can take steps to hold your stockbroker accountable for their recklessness. FINRA arbitration is usually the best way to accomplish this goal, as going to court is less cost-effective and could take years to resolve. 

    Your FINRA case will be heard by a panel of three arbitrators once you’ve initiated arbitration, and it could take as many as eighteen months to settle. Your attorney will work to gather the documentation and financial records needed to prove that you are entitled to full repayment of the stock losses you suffered due to mutual fund switching by your stockbroker.

    Contact a Qualified Mutual Fund Switching Lawyer

    If you would like to learn more about what mutual fund switching is and how it may have caused your stock loss, meet with an experienced stock loss lawyer at Meissner Associates. You can find us online or call our firm at 212-764-3100 to set up your confidential consultation.