The following story illustrates why it is important for individual investors to work with a fiduciary investment advisor instead of a non-fiduciary brokerage firm. If you are currently working with a brokerage firm, I recommend you look carefully at what you are being charged on for monthly statements for various services and transactions. – Charles Stanley, editor

Finds evidence of overcharges for transactions, postage

By Bruce Kelly September 7, 2011 3:42 pm ET

Living up to its warnings of this year, the Financial Industry Regulatory Authority Inc. said today that it has walloped several firms for overcharging for postage and handling.

In May, Finra chief executive Richard Ketchum warned an audience of brokerage executives at the self-regulator’s annual meeting in Washington that it was making inquiries into firms’ overcharging clients for such services. This morning, Finra said it fined five firms a total of $910,000 for overcharging clients on handling transactions.

Mr. Ketchum earlier said: “We are taking a close look at excess charges for routine services, which some firms appear to be treating as an additional de facto commission. You can expect to see some enforcement activity in this area with respect to particularly egregious examples.”

Finra today said in a statement that the five firms were “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.”

Firms allegedly were using the practice to gouge clients, Finra said. “With respect to each of these firms, the handling fees were designed to serve as a source of additional transaction-based remuneration for the firm and thus were far in excess of the cost of the handling-related service the firms provided.”

The five firms and respective fines were: Pointe Capital Inc. of Boca Raton, Fla., fined $300,000; John Thomas Financial of New York, $275,000; First Midwest Securities Inc. of Bloomington Ill., $150,000; A&F Financial Securities Inc. of Syosset, N.Y., $125,000; and Salomon Whitney LLC of Babylon Village, N.Y., $60,000.

To continue reading, go to FINRA fines five firms almost $1M over fees

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