Settlement Announced by State Regulators in Case Involving Excessive Fees Charges to Small-Dollar Investors

On June 9, 2025, the North American Securities Administrators Association (NASAA) announced a $9.3 million settlement with Edward Jones, TD Ameritrade, LPL Financial, RBC Capital Markets and Stifel, arising from allegations that the firms charged excessive fees to small-dollar investors. According to the announcement, a five-year investigation showed that the firms charged approximately $19 million to process 1.12 million small dollar equity trades.

NASAA’s announcement noted that wealth management firms are prohibited from charging “unreasonable” fees to their retail clients and the reasonableness of such fees will be determined based on various factors, including guidance under FINRA Rule 2121.  Under that rule and its supplementary material, a mark-up pattern of five percent or even less can be regarded as unfair or unreasonable under the long-standing “5% Policy” of FINRA and formerly the National Association of Securities Dealers.

The investigation was led by Massachusetts’ top securities regulator, William Galvin, who stated: “This custom that some brokerage firms have of nickel-and-diming customers in order to line their pockets with commissions is something that I and other securities regulators have been watching closely. We have secured similar settlements for overcharged customers with other firms in the past, and we will continue to keep our eyes on any other firms that attempt to charge small-dollar investors these unreasonable fees.”  In addition, according to NASAA officials: “When people decide to invest their hard-earned money, they should get the maximum value of their investing dollars.”