Back in June of this year, the Texas State Securities Board announced that it had joined a multi-state settlement with five firms after leading an investigation along with Alabama, Iowa, Massachusetts, Missouri, Montana, and Washington. And today, Texas State Securities Commissioner, Travis J. Iles, entered five orders against Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade for charging retail customers unreasonable commissions on small-dollar transactions.
The investigation into these firms found that over a period of five years, the firms collectively charged Texas customers approximately $1,495,226.26 in excess of 5% on 91,586 small equity transactions.
Texas securities laws prohibit firms from charging customers unreasonable commissions. FINRA Rule 2121 provides further guidance, noting that a commission of five percent, or even less, may be considered unfair or unreasonable.
The firms were reprimanded and ordered to cease and desist from the conduct described above. It was also ordered that the firms pay a combined total of $1,495,226.26 in restitution to affected Texas customers and pay $255,000 in administrative fines and investigative costs to the General Fund of Texas.
Each firm has also agreed to revisit their policies and procedures to ensure that they include safeguards to prevent the charging of excessive fees in the future.
Deputy Commissioner Cristi Ramón Ochoa and Elliott Wolf, Attorney, Legal & Investigations Division, led Texas’ efforts in realizing a great result for Texans.
