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Regulation and Compliance > Federal Regulation > FINRA

FINRA Hits Baird Over $100 Trading Commissions

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What You Need to Know

  • Baird was ordered by FINRA to pay about $416,000 including a fine, restitution and interest.
  • The BD charged a minimum commission of $100 even on small stock trades, FINRA says.
  • The commissions Baird charged ranged from over 5% to 93% of the transactions' principal value.

The Financial Industry Regulatory Authority has ordered Robert W. Baird & Co. to pay a total of $416,481 plus interest over allegations that the firm overcharged its clients on thousands of equity transactions for more than one year.

Without admitting or denying the findings of FINRA’s investigation, Christa Graverson, Baird’s chief compliance officer, signed a FINRA acceptance, waiver and consent letter on Aug. 15 in which the firm consented to the imposition of a censure, a $150,000 fine, and restitution of $266,481 plus interest over its actions. FINRA signed the letter on Wednesday.

Baird did not immediately respond to a request for comment on Friday.

From June 2019 through December 2020, Baird’s published commission schedule had a minimum commission of $100 on equity transactions that FINRA said resulted in an “unfair commission being charged on 7,277 equity transactions.”

Baird also failed to establish and maintain a supervisory system “reasonably designed to achieve compliance with FINRA Rule 2121,” according to FINRA.

During the period in question, Baird used a published commission schedule under which the firm charged commissions on “low-principal transactions that were not fair and reasonable,” FINRA said in the AWC letter.

For all equity transactions, Baird imposed a minimum commission of $100 as well as a handling fee, according to FINRA.

As an example, one client bought two shares of Apple for a principal amount of $772 and was charged a $100 commission, equating to 13% of the principal amount, FINRA said. As a result of the minimum commission, “Baird charged at least $266,481 in unfair commissions, in a total of 7,277 transactions on behalf of 4,623” clients, according to FINRA.

The commissions Baird charged ranged from over 5% to 93% of the transactions’ principal value, FINRA said. The average overcharge per transaction was $37.

Baird did not appropriately consider requirements for transactions when the minimum $100 commission was imposed, according to FINRA.

Specifically, although the company typically flagged transactions where clients were charged over 5% of principal and reviewed those transactions for excessive commissions, the firm’s supervisory system didn’t flag for review transactions when the firm charged the minimum $100 commissions, FINRA said.

As a result of its actions, Baird violated FINRA Rules 3110 (governing supervision), 2121 (governing fair prices and commissions) and 2010 (governing standards of commercial honor and principles of trade).

(Photo: Adobe Stock)


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