A Wisconsin company that allegedly overcharged thousands of customers on equity transactions has been penalized by the Financial Industry Regulatory Authority, AdvisorHub reports.
Robert W. Baird & Co., based in Milwaukee, was ordered to pay a $150,000 fine along with $266,481 plus interest owed in restitution. In a letter of acceptance, waiver and consent, the company also accepted a censure but did not admit or deny the allegations.
According to FINRA, Baird’s published commission schedule from June 2019 through December 2020 had a minimum commission of $100 on equity transactions. Because of this, the authority said unfair commissions were charged on 7,277 stock trades for 4,623 customers. The commission schedule for “low-principal transactions” was not fair and reasonable, the AWC letter stated. In some cases, the commission charged to customers was up to 93% of the principal value of the transactions. One customer was charged the $100 commission on a $772 purchase of Apple stock, amounting to 13% of the principal. The average overcharge for the transactions in question was $37.
FINRA also noted that even though Baird normally flagged and reviewed trades in which clients were charged over 5% of principal, the company’s supervisory system did not flag the transactions in which the $100 minimum commission was charged. The authority said Baird failed to establish and maintain a supervisory system that would have adequately addressed the issue of excessive commissions.
Baird was found to have violated FINRA Rules 3110 governing supervision of brokers, Rule 2121 involving fair prices and commissions, and Rule 2010 requiring high standards of commercial honor and just and equitable principles of trade.
The attorneys at Lewitas Hyman fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. We have decades of experience representing clients with respect to examinations, investigations and enforcement proceedings initiated by the SEC, FINRA, state securities regulatory agencies and other self-regulatory organizations. If your firm is facing an investigation from a regulatory agency, please contact us at (888) 655-6002or through our online contact form.