New York, NY securities attorney Jenice L. Malecki talks about types of damages typically sought in unauthorized trading, churning, or overconcentration cases. She states that in churning cases, the damages are often tied to the commissions earned by the broker. She has seen many situations where the investor earns no profit, yet the broker collects hundreds of thousands of dollars in commissions. The purpose of the claim is to recover those commissions, as the investor—not the broker—should benefit from the account, which is the investor’s property, not a proprietary account. In some cases, investors may even incur losses while brokers profit from excessive trading, which is clearly inappropriate.

Regarding other causes of action, such as over-concentration or unauthorized trading, she notes that in cases of unauthorized trading, if it can be proven that a trade occurred without the investor’s consent or communication with the broker, the remedy sought is typically rescission, returning the account to its state prior to the trade. In over-concentration cases, a seemingly profitable portfolio can be jeopardized by a disproportionate investment in a single asset—often oil and gas, for example. The damages pursued focus specifically on that over-concentrated portion of the portfolio, rather than the net out-of-pocket performance of the entire portfolio. The goal is to seek relief tied directly to the portion of the portfolio that was mismanaged due to over-concentration.