According to FINRA, Joseph Gunnar & Co. LLC was censured, fined $65,000, and ordered to pay $69,898.17 plus interest in restitution to customers on July 8, 2024, for charging unfair commissions on equity transactions and failing to establish adequate supervision to monitor for unfair commissions.

The firm charged a minimum commission of $100 on equity transactions, in addition to a handling fee. The commissions charged ranged from 5.01 percent to 55.56 percent of the transactions' principal amount. While the firm's supervisory system was designed to flag for review any transaction where the commission exceeded 2.4 percent of the transaction's principal amount, supervisors often failed to consider the factors required by FINRA Rule 2121.01 when determining whether the commission was fair.

Where the commission was equal to or less than the firm's $100 minimum commission, the firm's supervisors routinely approved transactions without considering relevant factors. Consequently, the firm never cancelled or reduced a commission for a transaction where it charged the $100 minimum commission, even though in many instances the total commission exceeded five percent of the transaction's principal amount.

This case highlights that broker-dealers must ensure their commissions are fair and reasonable, not excessive. FINRA rules require firms to consider multiple factors when determining fair pricing, including the type of security, the availability of the security, the expense of executing the order, the value of services rendered, and the amount of money involved in the transaction. Investors who notice high commission charges relative to the size of their transactions should question whether those charges are reasonable and fair.