The New Mexico Securities Division has joined a multistate settlement with several financial firms accused of overcharging customers. The involved firms—Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade—were investigated for charging unreasonable commissions on small-dollar transactions.
The firms have agreed to compensate affected customers with restitution plus six percent interest from the transaction date until the settlement date.
This settlement follows a five-year investigation led by state securities regulators from Alabama, Iowa, Massachusetts, Missouri, Montana, Texas, and Washington. The investigation revealed that the firms charged around $19 million in commissions for 1.12 million small-dollar equity transactions across the country.
State securities laws prohibit excessive commissions. According to the Financial Industry Regulatory Authority's Fair Prices and Commissions Rule (Rule 2121), commissions exceeding five percent may be deemed unfair or unreasonable. It was found that many transactions executed by these firms included commission rates above this threshold.
Benjamin Schrope, acting director of the New Mexico Securities Division, stated: "This settlement is an important reminder for firms to be diligent with regard to charging practices and ensure they’re dealing fairly with customers."
In addition to customer restitution, each firm will pay fines to settling states. New Mexico will receive $175,000 as part of this agreement. The firms are also required to implement measures to prevent future excessive fees.
New Mexico residents seeking more information about this settlement can contact the Securities Division at 505-476-4580 or visit their website at www.rld.nm.gov/securities-division.
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