Five National Broker-Dealers Fined More Than $9M for Excessive Commissions

A coalition of state regulators has fined five prominent broker-dealers more than $9 million and ordered them to repay customers as part of a sweeping multi-state enforcement effort targeting excessive trading commissions. The investigation, coordinated by state agencies through the North American Securities Administrators Association (NASAA) with support from the Securities and Exchange Commission (SEC), reflects growing regulatory scrutiny around broker-dealer fee practices nationwide.

In total, the firms will return approximately $19 million to affected investors, plus interest, after regulators found more than 1.1 million equity transactions involved “unreasonably high” commissions. The action sends a clear signal: inflated fees that erode investor returns, particularly for retail clients, will not be tolerated.

What Sparked the SEC’s Investigation?

The enforcement action arose from concerns that five major broker-dealers were routinely charging retail clients excessive commissions on equity trades. Regulators from multiple states focused on trades where commissions exceeded 5% of the transaction’s principal value — a level widely considered excessive under Financial Industry Regulatory Authority (FINRA) guidelines.

According to NASAA, these practices affected more than 1.1 million transactions over a five-year span and resulted in approximately $19 million in overcharges. States leading the investigation include Alabama, Massachusetts, Missouri, Iowa, Montana, Texas and Washington, with additional states expected to join the settlement.

The firms named in the settlement include LPL Financial, Edward Jones, RBC, TD Ameritrade (now part of Charles Schwab) and Stifel. Each agreed to repay affected investors and implement compliance reforms following findings that their commission practices violated state standards.

Edward Jones has now faced two enforcement actions from NASAA in 2025 alone. Earlier this year, the firm paid a $17 million fine to resolve allegations it failed to supervise mutual fund commission practices properly.

In response to the latest settlement:

• Edward Jones said it had resolved the matter and emphasized its commitment to transparency and ongoing process improvements.
• Charles Schwab, on behalf of TD Ameritrade, stated the issue related to a narrow category of historical, broker-assisted trades, making up less than 1% of order volume.
• RBC noted it had self-reported the issue to FINRA prior to the investigation and had already made internal policy changes.
• LPL Financial and Stifel did not provide public comments.

What the Settlement Requires

As part of the agreement, the firms must reimburse affected customers for excessive commissions, plus 6% interest. In total, the settlement includes:

• Restitution of approximately $19 million to investors
• $9.35 million in fines and investigative cost reimbursements to the states
• Mandated compliance reforms, including:
  • Stronger internal controls
  • Enhanced supervisory procedures
  • Staff training focused on commission and fee standards

The settlement also calls for ongoing oversight to ensure firms implement and maintain these safeguards moving forward.

Why Investors Should Take Notice

This case underscores how excessive commission practices can erode investor returns, particularly for small-dollar investors, who are more likely to feel the impact of inflated fees. State regulators noted that thousands of customers were charged unreasonable rates, sometimes well above the industry’s informal 5% benchmark.

Regulators and FINRA emphasize that commissions must be “fair and reasonable” in light of all circumstances. Transactions exceeding 5% may be presumed excessive, especially when firms fail to disclose or justify the charges. The NASAA settlement reinforces the industry-wide expectation for greater transparency and more robust compliance around fee practices.

With dozens of additional states expected to join the settlement, this enforcement effort could have lasting implications for how broker-dealers assess and disclose commissions going forward.

Next Steps for Investors Seeking Recovery

If you believe you were charged excessive commissions on equity trades by one of the broker-dealers named in the NASAA settlement, you may be entitled to reimbursement. Regulators have made it clear: investors deserve fair, transparent pricing, and there is now a path to seek recovery. Reviewing your transaction records with an experienced securities attorney is a critical first step in determining whether you were affected.

Sonn Law Group has a strong track record of representing investors in cases involving broker-dealer misconduct, hidden fees and abusive commission practices. Our team offers free, confidential consultations and works on a contingency basis, meaning you pay nothing unless we recover funds on your behalf.If you suspect you were overcharged, contact us today via phone at 833-912-3000 or fill out our online contact form.

We offer free, confidential consultations and work on a contingency fee basis, which means you pay nothing unless we recover funds on your behalf.

If you or a loved one invested with Edwin Brant Frost IV, First Liberty or any affiliated entity, contact us today to discuss your legal options. Call us at 833-912-3000 or complete our online contact form to schedule a case evaluation.