From the Regulators

An alert stresses the importance for investors to understand the full impact of brokerage fees on their investment accounts

By James Langton |

The U.S. Securities and Exchange Commission's (SEC) Office of Investor Education and Advocacy along with the SEC's Broker-Dealer Task Force issued an investor alert that aims to help investors identify excessive trading in their brokerage accounts and provides direction on how to deal with the problem.

The alert advises investors that excessive trading can occur even if their portfolio value increases. Furthermore, it stresses the importance of understanding the full impact of brokerage fees on their investment accounts.

The SEC notes that its Broker-Dealer Task Force has identified churning and excessive trading as priorities and that the regulator has recently brought enforcement actions against brokers for churning client accounts and recommending inappropriate strategies that involve frequent trading.