Wood (Arthur W.) Company, Inc., headquartered in Boston, Massachusetts, has been fined $10,000.00 and statutory disqualified by Financial Industry Regulatory Authority (FINRA) pursuant to a National Adjudicatory Council Decision containing findings that the firm, inter alia, charged customers commissions which were excessive, and failed to supervise commissions charged by registered representatives. In the Matter of Department of Enforcement v. Wood (Arthur W.) Company, Inc., No. 2011025444501 (Mar. 15, 2017).
According to the Decision, three hundred and sixty-seven transactions were effected in customer accounts which resulted in commissions charged to customers ranging from five to eighteen percent. Apparently, one hundred and eight-five trades contained seven percent commissions.
The Decision indicated that the firm’s trade blotter review was not analyzed by the firm’s staff with an emphasis on commissions charged to customers. Particularly, there was no information reportedly referencing the commission in the form of a percentage of each trade amount. Evidently, the firm discovered that customers had been overcharged based upon an examination conducted by FINRA personnel. The National Adjudicatory Council stated that the firm failed to justify the markups charged, prompting a finding that the charges were not reasonable. Consequently, the firm’s conduct was violative of FINRA Rule 2010, IM-2440-1, and NASD Rule 2440.
Further, the firm’s supervision protocols required the firm to assess the commissions charged to customers in order to determine whether they were reasonable; however, the firm failed to abide by its own rules. Rather, the firm relied upon an inaccurate commission schedule as its basis of not detecting the substantial commissions charged in customer accounts. Consequently, the firm’s conduct was found by the National Adjudicatory Council to be violative of FINRA Rule 2010 and NASD Rule 3010.
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