When trading in a client discretionary account becomes excessive, what is this practice known as?

The practice of excessive trading in a client discretionary account is known as churning. This occurs when a broker or investment advisor makes unnecessary trades in a client's account primarily to generate commissions, rather than to benefit the client's investment objectives. Churning is a violation of regulatory standards and is considered unethical because it can lead to increased costs for the client and potential losses due to fees and commissions.

Churning undermines the fiduciary duty brokers have to act in the best interest of their clients. In a discretionary account, where the broker has the authority to make trading decisions without consulting the client, clients can be particularly vulnerable to such practices. This highlights the importance of regulatory oversight and the need for financial professionals to adhere strictly to ethical guidelines.

The other options pertain to different concepts in trading. For instance, overtrading generally refers to making too many trades but does not inherently involve the manipulation associated with churning. Margin trading relates to borrowing funds to increase the potential return on investments but does not directly involve the ethics of trading frequency. Sabotage does not have a related context in this scenario and is not applicable to trading practices.