Arceneaux v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
United States Court of Appeals for the Eleventh Circuit
767 F.2d 1498 (11th Cir. 1985)
After opening an options account with Merrill Lynch (defendant) broker Ribaudo, Arceneaux's (plaintiff) trading activity turned over roughly eight times annually, departed sharply from his prior investing behavior, and ultimately produced a $45,697 net loss for Arceneaux against over $11,000 in commissions for Ribaudo; the jury found for Arceneaux on a churning claim, and Merrill Lynch appealed on sufficiency-of-evidence grounds.
Whether there is sufficient evidence to support a churning violation under federal securities laws if a broker buys and sells securities for a customer's account without regard to the customer's interests and for the purpose of generating commission.