Joseph Gunnar Co. LLC, headquartered in Uniondale, New York, has been censured and fined $65,000.00 by Financial Industry Regulatory Authority (FINRA) because Joseph Gunnar charged unfair commissions on equity transactions and failed to supervise its business to ensure that commissions complied with FINRA rules. Letter of Acceptance, Waiver, and Consent No. 2019060648401 (July 8, 2024).
According to the AWC, from August of 2018 to September of 2022, Joseph Gunnar charged a minimum commission of $100.00 on equity transactions. This led to the securities broker dealer charging unfair commissions on 1,683 transactions. For example, one customer sold 45 shares of New York Community Bancorp Inc. for $627.91. The commission they were charged amounted to 15.9 percent of the transaction’s principal amount. In total, Joseph Gunnar charged $69,898.17 in unfair commissions, with rates ranging between five percent and 55 percent of the transaction’s principal amount. The AWC stated that the securities broker dealer went against industry guidelines on fair commissions.
Moreover, the AWC stated that Joseph Gunnar failed to use a supervisory system designed to ensure compliance with FINRA Rule 2121. The firm’s procedures flagged transactions where the commission exceeded 2.4 percent of the transaction’s principal amount but did not adequately review the fairness of the minimum $100.00 commission.
According to the AWC, supervisors routinely approved transactions without considering whether the commissions were fair, which went against written procedures. Consequently, the securities broker dealer never reduced or cancelled a commission.
In addition to the commission violations, from June of 2020 to August of 2023, Joseph Gunnar failed to file offering documents with FINRA for 14 private placements, violating FINRA Rules 2010 and 5123.
