In August 2013, FINRA announced that Hunter Scott Financial, LLC submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000. 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 handling fee, in addition to a commission, on securities transactions.
The findings stated that the handling fee was fixed at $50 per transaction and a substantial portion was not attributable to any specific cost or expense incurred by the firm in executing the trade, or determined by any formula applicable to all customers. The handling fee was determined by the firm, not by the individual representative executing the order. Although reflected on customer trade confirmations as a charge for handling, a substantial 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. The firm’s characterization of the charge as being for handling was therefore improper. The finding also stated that by designating the charge as a handling fee on customer trade confirmations, the firm understated the amount of the total the firm commissions charged and misstated the purpose of the handling fee. It is unclear from the FINRA announcement whether customers have initiated FINRA arbitrations or any other securities arbitrations.