June 9, 2025 — AUSTIN — The Texas State Securities Board has announced its participation in a major multi-state settlement with five national brokerage firms after uncovering widespread overcharging of retail investors on small-dollar equity trades. The settlement, led by Texas in collaboration with Alabama, Iowa, Massachusetts, Missouri, Montana, and Washington, will return millions to affected customers and impose new safeguards to prevent future fee abuse.
The firms named in the settlement—Edward Jones, LPL Financial, RBC, Stifel, and TD Ameritrade—were found to have charged excessive commissions over a five-year period, collecting $19 million in fees for trades totaling just over $1 million in principal value.
“These practices were not only unfair—they were illegal,” said Texas Securities Commissioner Travis J. Iles. “We are always happy to see money going back to Texas investors. This was a long, complex, and thorough investigation. We appreciate the coordination among the working group states and the willingness of the firms to correct the wrong that was done.”
What the Investigation Found
According to findings, the firms repeatedly charged commissions that far exceeded acceptable limits under FINRA Rule 2121, which states that even commissions below five percent may be considered excessive under certain conditions. Many of the examined trades saw commission rates well above the five percent benchmark—particularly troubling for small-dollar investments, where fees often eclipsed the value of the transaction itself.
“This type of pricing disproportionately harms smaller investors,” said Cristi Ramón Ochoa, Deputy Commissioner, who, alongside Elliott Wolf, Attorney with the Litigation & Investigation Division, led Texas’ charge in the case.
What the Settlement Includes
Under the terms of the agreement:
- Impacted customers will receive full restitution, plus 6% interest, dating back to the original trade date.
- Firms will pay fines and costs totaling up to $9.3 million, distributed among 27 participating states.
- Each firm has agreed to adopt or update internal policies and procedures to prevent future violations, including enhanced fee oversight and compliance measures.
Future Oversight & Attorney Fee Limits?
The investigation and settlement focused on commissions charged by brokerage firms, not on attorney compensation. When asked whether similar caps or standards might be applied to legal fees, especially in cases involving financial restitution, a spokesperson for the Securities Board noted that attorney fee regulation falls outside its purview, and is typically governed by state bar associations, courts, or settlement agreements themselves.
Currently, legal fees in securities cases—such as class actions or investor restitution—are usually subject to court approval, and often include a percentage cap to prevent exploitation. However, there is no new cap proposed as part of this settlement, and the focus remains on ensuring brokers comply with fiduciary standards.
What It Means for Investors
This settlement sends a clear message: fee transparency matters, and regulatory agencies are prepared to act when firms violate that trust.
If you believe you may have been affected by excessive commissions on small-dollar trades, the Texas State Securities Board encourages you to contact their office or your brokerage firm directly. Questions can also be directed to info@ssb.texas.gov or by calling (512) 305-8300.
“This is about protecting everyday Texans,” Commissioner Iles said. “We’re making sure they get their money back—and ensuring it doesn’t happen again.”
