Impacted New Mexicans will receive restitution plus interest

SANTA FE – The New Mexico Securities Division announced today that is has joined a multistate settlement with Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade following an investigation into unreasonable commissions being charged on small-dollar transactions.

The five firms have agreed to provide affected customers with restitution plus six percent interest from the date of the customer’s transaction through the date of the settlement.

The five-year investigation was led by a working group of state securities regulators in Alabama, Iowa, Massachusetts, Missouri, Montana, Texas, and Washington. The regulators found that the firms charged unreasonable commissions to thousands of retail brokerage customers on certain equity transactions. Investigation data shows that the firms charged approximately $19 million to process 1.12 million small-dollar equity transactions and trades nationwide.

State securities laws prohibit firms from charging unreasonable commissions to clients. Under the Financial Industry Regulatory Authority’s Fair Prices and Commissions Rule (rule 2121), a commission pattern of five percent or less may be considered unfair or unreasonable. In this case, numerous equity transactions executed by the five firms included a commission that exceeded five percent of the principal value of the transaction.

“This settlement is an important reminder for firms to be diligent with regard to charging practices and ensure they’re dealing fairly with customers,” said Benjamin Schrope, acting director of the New Mexico Securities Division.

In addition to providing restitution for the affected customers, the firms will also pay a fine to each settling state. New Mexico will receive $175,000. Each firm must also take measures to ensure that its policies and procedures include safeguards to prevent charging excessive fees in the future.

New Mexico residents who have questions about this settlement should contact the Securities Division at 505-476-4580 or online at www.rld.nm.gov/securities-division.