Ft. Lauderdale Firm Fined and Censured by FINRA For Fees Charged to Clients

The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, March, 2013.”

Newbridge Securities Corporation (CRD #104065, Ft. Lauderdale, Florida)

was censured, fined $50,000, and required to revise its WSPs to address the requirements of an imposed undertaking, relating to its handling fee on equity security trades, and provide related training to all associated persons.

Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it charged its customers a fee for handling, in addition to a commission, on equity security trades, and its characterization of the charge as being for handling was improper.

FINRA's findings stated that the firm’s handling fee varied in amount from trade to trade, and the particular dollar amount charged was not attributable to any specific cost or expense the firm incurred in executing the trade, or determined by any formula applicable to all customers. The findings also stated that it was determined by the individual representative executing the order, who had discretion to set the dollar amount of the fee within a particular range the firm set. The range the firm authorized varied from branch to branch; consequently, customers of
different branches might be assessed different amounts for handling on identical trades.

FINRA's findings also included that although reflected on customer trade confirmations as a charge for handling, a portion of the fee actually served as a source of additional transaction-based remuneration or revenue to the firm, in the same manner as a commission, and was not directly related to any specific handling services the firm performed, or handling-related expenses the firm incurred, in processing the transaction. By designating the charge as a handling fee on customer trade confirmations, the firm understated the amount of the total commissions it charged and misstated the purpose of the handling fee.
(FINRA Case #2012032048401)

This ends the information from the FINRA website.

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