The Texas State Securities Board announced today that it has joined a multi-state settlement with five major financial firms – Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade – over allegations of charging unreasonable commissions on small-dollar transactions to retail customers.
Texas, alongside Alabama, Iowa, Massachusetts, Missouri, Montana, and Washington, led the investigations. Findings revealed that over a five-year period, these firms collectively charged their retail customers approximately $19 million in commissions to process just over $1 million worth of equity transactions and trades.
State securities laws prohibit firms from levying unreasonable commissions. The investigations uncovered numerous equity transactions where commissions significantly exceeded five percent of the transaction's principal value, a rate that FINRA Rule 2121 indicates may be considered unfair or unreasonable.
As a result of the investigation and settlement terms, the involved firms have agreed to provide restitution to affected customers, plus 6% interest from the transaction date. Additionally, the firms will pay total fines not exceeding $9,345,000 to the 27 states that have joined the settlement to date. Crucially, each firm has also committed to implementing new policies and procedures, including safeguards, to prevent excessive fees in the future.
"We are always happy to see money going back to Texas investors,” said Commissioner Travis J. Iles. “This was a long, complex, and thorough investigation. We appreciate the coordination among the working group states and the willingness of the firms to correct the wrong that was done here and get money back to the harmed investors—not only in Texas, but across the country.”
Deputy Commissioner Cristi Ramón Ochoa and Elliott Wolf, Attorney with the Litigation & Investigation Division, spearheaded Texas’ efforts in securing this outcome for Texans.
