Fiduciary Duty
Churning occurs when a representative engages in:
Churning = excessive trading for commissions, regardless of investment objective.
Complete Analysis & Legal Rationale
Churning is excessive trading in a client's account primarily to generate commissions for the representative, without regard to the client's investment objectives. It is a prohibited practice under securities laws and fiduciary standards.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Trading in suitable securities is proper practice, not churning.
Matches the verified teaching point in the explanation.
Unauthorized trading is a separate violation; churning involves excessive frequency.
Market timing alone is not churning; churning is about excessive frequency for commissions.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.