Five Brokerage Firms Ordered to Pay $18 Million for Mutual Fund Overcharges

The Financial Industry Regulatory Authority (FINRA) has ordered brokerage firms Edward Jones, Stifel Nicolaus & Co., Janney Montgomery Scott, Axa Advisors, and Stephens Inc. to pay a total of $18 million back to clients after failing to waive sales charges for certain retirement accounts and charities.

Edward Jones was ordered to pay $13.5 million, Stifel Nicolaus & Co., $2.9 million, Janney Montgomery Scott, $1.2 million, Axa Advisors, $600,000, and Stephens Inc., $150,000. FINRA found that the brokerage firms “unreasonably relied on financial advisers to waive charges” for these accounts without training them or providing them with the correct information on how to do so.

We are happy to see that regulators are cracking down on investor abuse. Sadly, the wrongdoing here reflects that brokerage firms routinely fail to look out for investors’ best interests. Investment fraud, mutual fund fraud, and stockbroker misconduct remains an enormous problem in the financial industry.

FINRA found that going back as early as July 2009, the firms failed to provide fee waivers that certain mutual funds offered to charity and retirement accounts. FINRA also found that in other instances investors were put into the wrong share classes, which subjected those investors to charges they should not have been assessed.

This is not the first time that brokerage firms have been caught over-charging investors on such fees. Three months ago FINRA ordered Wells Fargo Advisors, Raymond James, and LPL Financial to pay a combined $30 million for the same type of violations. Since then, Wells Fargo agreed to pay an additional $7 million.

All of the aforementioned penalties will result in about $55 million to be paid back to investors in about 75,000 retirement accounts and charities.

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