California’s Department of Financial Protection and Innovation (DFPI) announced on July 1 that five financial companies were being compelled to return more than $1.3 million to customers charged excessive commissions.
The firms involved are Edward Jones, LPL Financial LLC, RBC Capital Markets LLC, TD Ameritrade and Stifel, Nicolaus & Co. Inc. The DFPI’s enforcement action resulted from a multi-state investigation revealing that these firms collectively charged around $19 million in high commissions to clients making small transactions.
California laws prohibit unreasonable commissions, and regulatory guidelines suggest that commissions should be 5 percent or less, a threshold exceeded in many cases during the investigation's five-year period. The DFPI’s mission statement is to ensure fair pricing for consumers and combat hidden fees and unfair practices that diminish trust in the financial sector.
The DFPI joined a coalition of multiple states, as part of the North American Securities Administrators Association, to investigate the five firms. To settle the charges, each firm has agreed to refund California customers the amount listed below, plus 6 percent interest.
- LPL Financial LLC: $217,067.99
- RBC Capital Markets LLC: $350,808.76
- TD Ameritrade Inc: $99,175.11 (TD Ameritrade Inc. has been acquired by Charles Schwab)
- Edward Jones: $520,434.51.
- Stifel, Nicolaus & Co. Inc.: $97,483.29
Additionally, the firms will pay a total penalty of $175,000 to the DFPI.
“California will not tolerate companies gobbling up consumers' hard-earned money with exorbitant commissions. These firms are supposed to help people invest and manage their money, but these excessive fees make it harder for people to get ahead financially. It is particularly egregious when consumers are making small, low-dollar transactions,” DFPI Commissioner KC Mohseni said in a press release.