Nesbit v. McNeil
United States Court of Appeals for the Ninth Circuit
896 F.2d 380 (1990)
Broker McNeil (defendant), a family friend, managed investment accounts for Nesbit (plaintiff) and her late husband's trust for eleven years, during which the accounts gained $182,915 in value while McNeil and his firm collected roughly $250,000 in commissions. Nesbit sued for churning — excessive trading generating commissions disproportionate to any investment benefit — and the district court ruled in her favor; McNeil appealed.
Whether a claim for churning prevails where trading in an investor's account was excessive relative to the investor's objectives, the broker exercised control over the account, and the broker acted with intent to defraud or willful disregard of the investor's objectives.