Wells Fargo and Merrill Lynch have agreed to pay state regulators $4.4 million to settle allegations that they charged clients excessive commissions on more than 256,000 equity transactions. The settlement is the culmination of an investigation by eight states, led by Massachusetts, into what regulators described as widespread overcharges on small-dollar trades.
Wells Fargo was the focus of most of the allegations. Regulators said the firm was responsible for nearly $3.9 million in "unreasonable commissions" assessed on about 228,000 transactions from September 2020 through October 2025.
Wells Fargo declined to address the allegations directly: "Our focus remains on serving clients, maintaining strong compliance and oversight practices, and upholding the trust our clients place in us every day," the firm says, adding only that it addressed the compliance issues that led to the settlement years ago.
State authorities accused Merrill of collecting $549,000 in excessive commissions during the same 2020-2025 period. "Merrill addressed the issues raised in the settlement several years ago and is pleased to have reached a resolution with the states," a spokeswoman says.
This isn't the first settlement state regulators, working under the aegis of the North America Securities Administrators Association, or Nasaa, have reached with national brokerage firms involving allegations of commission overcharges. Last year, Nasaa announced a $9.3 million settlement with Edward Jones, TD Ameritrade, LPL Financial, RBC Capital Markets, and Stifel over allegedly excessive commission, and announced a $13 million settlement with Raymond James in 2023 involving similar allegations.
State authorities settled the present action with two Wells Fargo entities: Wells Fargo Clearing Services and Wells Fargo Financial Network, or FiNet, the firm's channel for independent advisors.
Wells Fargo and Merrill Lynch agreed to pay the penalty plus interest and administrative costs. State authorities say that retail investors who were overcharged for commissions on small-dollar transactions will receive restitution through the agreement.
"This settlement reinforces the responsibility of financial firms to review their practices and ensure customers are treated fairly," says Nasaa President Elizabeth Bowling.
Joining Massachusetts in the investigation and settlement were Alabama, Iowa, Missouri, Montana, New Jersey, Texas, and Washington.