CHURNING
churning, n.1. Securities. A stockbroker’s excessive trading of a customer’s account to earn more commissions rather than to further the customer’s interests; an abuse of a customer’s confidence for personal gain by frequent and numerous transactions, disproportionate to the size and nature of the customer’s account. ? Under securities laws, the practice is illegal ¡ª a violation of ¡ì 10(b) of the Exchange Act (15 USCA ¡ì 78j(b)). But because the fraud is the activity as a whole and there is no communication between the broker and the customer about a specific sale of securities, there is not normally a right of action for fraud based on churning. [Cases: Brokers 21; Securities Regulation 60.32(3). C.J.S. Brokers ¡ì 52; Securities Regulation¡ì¡ì 164, 197¨C198, 217, 222.]
2. Tax. A transfer of property that does not result in a significant change of ownership or use of the property, usu. to make the property eligible for amortization or a more favorable method of depreciation. See ANTICHURNING RULE . ¡ª churn, vb.
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