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FINRA Fines Broker-Dealers For Improper Handling Fees

On September 7, FINRA fined five broker-dealers for assessing improper handling fees against customers. The firms, including Boca Raton-based Pointe Capital, Inc. (now known as JHS Capital Advisors, Inc.), were fined for charging excessive handling fees that greatly exceeded the cost of the handling services provided by the firms. FINRA concluded that the fees were a way to charge customers additional commissions without reflecting those charges on trade confirmations and fee schedules.

As part of a targeted review of fees charged by broker-dealers, FINRA found that certain firms charged customers roughly $100 per transaction. Pointe Capital, for instance, charged up to $95 per trade on top its standard commission. FINRA determined that these firms earned a substantial percentage of their revenue from these fees.

The other firms sanctioned include John Thomas Financial of New York; First Midwest Securities, Inc., of Bloomington, Illinois; A&F Financial Securities, Inc., of Syosset, New York; and Salomon Whitney LLC of Babylon Village, New York. The fines ranged from $60,000 to $300,000. In addition, each firm agreed to disclose the specific services performed and all related fees on transaction confirmations and fee schedules. The firms also agreed to revise their supervisory and training procedures regarding commissions, reasonable fees, and the appropriate disclosures to make to customers.

The firms denied any wrongdoing but consented to the entry of FINRA’s findings.

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