New Mexico joins settlement with brokerages over excessive fees on small-dollar trades

New Mexico has joined a multistate settlement with five well-known brokerage firms that were charging unreasonable commissions on small-dollar transactions.

The firms, Edward Jones, LPL Financial, RBC Capital Markets, Stifel and TD Ameritrade, have agreed to pay affected customers restitution plus 6% interest from the date of the transaction through the settlement date, according to a New Mexico Regulation and Licensing Department news release.

New Mexico Securities Division Director Benjamin Schrope said in joining the settlement, many states agreed that their first concern was making sure impacted clients received proper restitution.

Schrope said specific client or restitution amounts are not available at this time. Impacted account holders should be credited the overcharge, and if they are no longer enrolled with one of the firms, they should receive a check, he said.

On top of providing restitution, whose amounts differ by customer, the firms will also pay a fine to each settling state. New Mexico will receive $175,000, which Schrope said will go to the Securities Division.

State securities regulators from Alabama, Iowa, Massachusetts, Missouri, Montana, Texas and Washington led the five-year investigation.

Data shows the firms charged approximately $19 million in processing 1.12 million small-dollar equity transactions and trades nationwide, according to the news release.

Under the Financial Industry Regulatory Authority’s Fair Prices and Commissions Rule, commissions of 5% or less can be considered unfair. In this case, numerous transactions between the five firms exceeded 5% based on the principal value of the transaction.

Each firm will also be required to take appropriate measures to ensure its policies and procedures include safeguards to prevent excessive charging fees in the future, according to the news release.

“We cooperated fully with the (North American Securities Administrators Association) task force investigation and are pleased to have resolved this matter,” an Edward Jones spokesperson wrote to the Journal. “We are committed to integrity and transparency and continually work to further strengthen our processes, foster a culture of compliance, and safeguard the trust of our clients and colleagues.”

Schrope said New Mexico residents who’ve been affected or have questions regarding the settlement can contact the Securities Division online or at 505-476-4580.

“Anybody that might be afraid they’re impacted or even in some other way, reach out to the Securities Division because we can answer those sorts of questions and help them,” he said.