According to FINRA, an Office of Hearing Officers decision found that Alpine Securities Corporation should be expelled from FINRA membership and ordered to pay $2,310,234 in restitution to customers. The firm appealed this decision to the NAC.

The firm was found to have converted and misused customer securities, engaged in unauthorized transactions, charged unfair prices, and charged unreasonable discriminatory fees. The firm increased its annual account fee from $100 to $60,000 per year ($5,000 monthly), an astronomical increase that was clearly designed to generate revenue at customer expense.

The firm applied this fee in a discriminatory manner, maintaining a list of favored customers who would not actually pay the fee. The firm immediately reversed the $5,000 monthly fee in accounts of customers it wanted to retain. Other customers who discovered the fee and complained also had it reversed. However, many customers were charged the fee without their knowledge.

To collect the unreasonable fee, the firm intentionally removed cash and securities from customer accounts without authorization. None of the customers authorized these transfers. Some customers paid the fee only because they were forced to do so to regain possession of their other holdings. The firm also moved securities positions worth less than $1,500 to a firm-owned account, unilaterally declaring them worthless and buying them for one penny per position, even though many were listed and marketable securities.

The firm then systematically moved remaining positions from customer accounts into escheat accounts, improperly declaring them abandoned. In total, the firm wrongfully declared 645 positions abandoned from 545 customer accounts. The estimated value of wrongfully seized securities was more than $54.5 million.

The firm also charged customers a two and one-half percent market-making fee which resulted in unfair prices exceeding five percent, and charged an illiquidity and volatility fee that was unreasonable. The firm collected approximately $1.5 million in these fees.

This case represents some of the most egregious customer abuse in recent FINRA enforcement history, involving systematic conversion of customer assets under the guise of unreasonable fees.