Broker-Dealer Fined for Charging Unfair Commissions

A broker-dealer settled FINRA charges for imposing unfair commissions on equity transactions and failing to file required private placement documents. 

According to the Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer unfairly imposed a dollar amount minimum commission on small dollar transactions, passing onto customers commissions of between 5.01 and 55.56 percent of the transactions' total value. FINRA found that the broker-dealer accumulated $69,898.17 in total unfair commissions. FINRA concluded that the broker-dealer's supervisory policy regarding commissions was inadequate because the commission charged exceeded the firm's established 2.4 percent commission cap.

FINRA further found that the broker-dealer failed to file a "private placement memorandum, term sheet or other offering document," as required by FINRA Rule 5123 ("Private Placements of Securities").

FINRA determined that the broker-dealer violated FINRA Rules 2121 ("Fair Prices and Commissions"), 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade"), and 5123 ("Private Placements of Securities"). 

To settle the charges, the broker-dealer agreed to (i) censure, (ii) pay $65,000 fine and (iii) pay restitution of $69,898.17 plus interest.