State Regulators Fine Five Major Broker-Dealers Nearly $10 Million for Excessive Commission Charges
From the desk of Jim Eccleston at Eccleston Law
A coalition of state securities regulators has ordered five broker-dealers — including Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade — to pay almost $9.9 million in penalties for overcharging customers on small-value trades. As reported by AdvisorHub, the enforcement action highlights widespread pricing issues that persisted over a five-year period.
According to Massachusetts Secretary of the Commonwealth William F. Galvin, the firms collectively overcharged clients by approximately $19 million. The alleged misconduct involved setting minimum commission charges as high as $95 per trade, regardless of the trade’s size. According to regulators such practices violate longstanding industry standards. Most state securities laws prohibit commissions exceeding 5 percent of a trade’s principal value.
AdvisorHub also reports that the North American Securities Administrators Association (“NASAA”) Enforcement Chair Amanda Senn called the settlements a crucial reminder for firms to stay vigilant about their pricing policies and ensure fair treatment of customers.
All five broker-dealers resolved the matter through a settlement without admitting or denying the regulators’ findings. Most of the settlement funds will go toward client restitution, with affected investors receiving reimbursement plus a 6 percent annual interest rate. According to AdvisorHub the enforcement effort was led by regulators from Alabama, Iowa, Massachusetts, Missouri, Montana, Texas, and Washington, with additional coordination from NASAA. At least 21 other states are expected to join the settlement.
This case follows a separate action earlier this year, where Edward Jones agreed to pay $17 million to settle charges from 14 state regulators over improper commission charges on mutual fund sales, according to AdvisorHub.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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