Protect Yourself From Excessive Trading: Tips to Avoid Unnecessary Risks and Costs

Monmouth Capital Management was expelled by FINRA (the Financial Industry Regulatory Authority) after it was found that between August 2020 and February 2023, Monmouth employed six representatives to excessively trade 110 accounts with substantial losses resulting in an estimated $3.9 million in commissions and trading costs. The customers also incurred high cost-to-equity ratios of over 70%, including one customer with a ratio of over 100%. Additionally, the accounts of Gold Star Families—those left behind when a family member dies in the Armed Forces—were churned and traded through rapidly, causing the families to suffer substantial losses. Monmouth also made false and misleading statements on their Form CRS which further contributed to their expulsion from FINRA. With these findings, FINRA has provided three ways for people to guard against excessive trading in brokerage accounts.