Syosset Firm Fined Over Trading Fees

A Syosset firm was one of five broker-dealers fined recently by the Financial Industry Regulatory Authority for understating the amount of total commissions charged to customers in trade confirmations and on fee schedules by mischaracterizing a portion of the commission charges as fees for handling services.

A&F Financial Securities Inc. was fined $125,000. The firm charged its customers a handling fee of $65 per trade in addition to a commission. Additional violations included inadequate supervisory system and procedures, and failure to comply with continuing education requirements.

“Trade confirmations and fee schedules must clearly reflect commission charges, and firms cannot disguise commissions by improperly describing them as charges for ancillary services. FINRA will continue to look closely at any firms that engage in these practices,” said Brad Bennett, FINRA executive vice president and chief of enforcement.

The cases resulted from a review of improper fees charged by broker-dealers in which FINRA found that the firms were routinely charging customers for handling fees that far exceeded the actual cost of the direct handling-related services the firms incurred in processing securities transactions.

The firms neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

FINRA is the largest non-governmental regulator for all securities firms doing business in the United States.