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J.P. Turner Fined $250,000 for Unreasonable Commissions on Stock Trades

By Oguz Ozdemir

Recently J.P. Turner & Company was fined $250,000 by the Financial Industry Regulatory Authority (FINRA) for failing to have a structured and supervised procedure for determining commission rates charged by their brokers. FINRA found that the company did not follow their Fair Pricing Rule to determine fair and reasonable commissions to their clients on stock trades.

The company was either aware of the practices of their licensed representatives or ignorant of what was going with regards to the commissions being charged by their brokers. Either way this is not good business and once again, the customer must endure an overcharge for commissions and then have to go to court to reclaim these costs.

FINRA establishes rules and regulations that have been set up to establish some semblance of order amongst the more than 5,000 securities and brokerage firms that it oversees. It tries to enforce these rules and regulations as well as establish policies and procedures as some kind of framework in an industry that can sometimes slip through the cracks.

The only basis that the brokers at J.P. Turner & Company had to go on was that they were allowed to charge up to 4.5 percent in commissions if the price of the trade was under $25 and 3.5 percent if the trade was over $25. Amazingly, 91 percent of the firm's transactions were under $25.

FINRA has a set of determining factors that is to be used in basing a commission structure. It has seven points that should come into play and they include: what kind of security or investment is it; how available is it in the marketplace; the cost of the security; the size of the transaction; providing the appropriate information to the customer; the way that the firm has determined commissions in the past; and what type of investments the company provides.

J.P. Turner & Company was fined $250,000 and must engage the services of an independent consultant to come in and completely go over their existing policies and procedures as they stack up against FIN Ra's Fair Pricing Rule. The company's trading manager did oversee the trades but only made sure that the commissions did not go over the established limits of 3.5 percent and 4.5 percent. The company has consented to FINRAs findings but has not admitted or denied the claims.

It is disturbing that a financial company is either negligent of the procedures of its brokers or ignorant of these policies. Either way it is an area that most businesses could not get away with for too long of a period before being held accountable. The unreasonable commissions charged by J.P. Turner's agents occurred between January 2002 and March 2005.

It is very easy to fall prey to so many deceptive and fraudulent practices when dealing with investment firms, stockbrokers and financial planners. If you feel that your financial representative did not act in your best interest, contact Napoli Bern Ripka at 1-888-LAW-IN-NY. Our team of lawyers has extensive experience in the line of securities arbitration and we can help you.

Originally posted at InjuryBoard by Oguz Ozdemir

Full post as published by New York City Personal Injury Lawyer on September 01, 2009 (boomark / email).