SEC Issues Investor Bulletin on Brokers' Miscellaneous Fees (with Lofchie Comment)

The SEC Office of Investor Education and Advocacy issued an Investor Bulletin to provide information about miscellaneous fees charged by certain brokers.

The SEC explained that, in general, fees from broker-dealers fall into two categories: (i) commissions or markups associated with the trade and (ii) miscellaneous fees for other expenses. The miscellaneous fees, according to the SEC, help to "reimburse the broker for expenses incurred in performing the transaction or a service for you." The SEC noted that the fees may be labeled in a variety of ways, including as postage and handling charges, administrative service fees, and clearing and transfer fees.

The notice also explains to investors how to obtain more information about the fees they are charged and how to protest against fees that seem unfairly high.

Lofchie Comment: Given the level of regulatory attention to this issue, firms should review the miscellaneous fees that they do charge, whether the fees are appropriate or fair, and how the fees are disclosed to clients.

See: SEC Investor Bulletin.Related news: FINRA Rule Regarding Charges for Services Published (Fed. Reg.) (December 8, 2014).