Legal Definitions - churn, burn, and bury

Definition: Churn, burn, and bury is a term used to describe the actions of a stockbroker who makes numerous risky trades in a customer's account, resulting in the loss of the customer's money.

Example: A stockbroker convinces a customer to invest a large sum of money in a particular stock. The stockbroker then makes several trades in the customer's account, buying and selling the same stock repeatedly, in an attempt to generate commissions for themselves. However, the stock's value drops, and the customer loses a significant amount of money. The stockbroker continues to make risky trades, hoping to recoup the losses, but only ends up losing more of the customer's money. Eventually, the customer's account is depleted, and the stockbroker has "churned, burned, and buried" the account.

This term is used to describe the unethical and illegal actions of some stockbrokers who prioritize their own financial gain over the best interests of their customers. By making numerous risky trades, these stockbrokers generate commissions for themselves, but ultimately cause their customers to lose money. The term "churn, burn, and bury" emphasizes the recklessness and disregard for the customer's well-being that characterizes this behavior.