Alabama is part of a $4.4 million settlement with Wells Fargo and Merrill Lynch after state securities regulators found the two brokerages charged unreasonable commissions on more than 256,000 equity trades nationwide between September 2020 and October 2025. Investigators determined that minimum fees, in some cases as high as $55 per trade, ate up a disproportionate share of small investors' money, with some customers losing up to 15% of their principal just to buy or sell stock.
The settlement, reported by AL.com, was reached through the North American Securities Administrators Association and covers Wells Fargo Clearing Services, Wells Fargo Advisors Financial Network, and Merrill Lynch. Securities regulators in Alabama, Massachusetts, Iowa, Missouri, Montana, New Jersey, Texas, and Washington all signed on to the agreement, according to the outlet's reporting. Affected customers across those states will receive restitution with interest, while the firms will also pay administrative fines and cover investigation costs.
Wells Fargo accounted for the overwhelming majority of the overcharges identified in the case. According to Investment News, the bank agreed to pay restitution tied to nearly $3.9 million in overcharges across 228,243 transactions, dwarfing Merrill Lynch's roughly $549,000 across 28,162 transactions — a figure AL.com also attributed to investigators. Wells Fargo runs its brokerage business through two separate entities named in the order, one serving traditional employee advisors and the other serving independent contractors, as the St. Louis Business Journal's reporting explains.
How a $55 Minimum Fee Added Up
State consent orders cited by Wealth Management show Wells Fargo kept a $55 minimum commission on certain equity trades through May 2023, a flat charge that could consume up to 15% of an investor's principal on small-dollar purchases. That far exceeds the threshold securities regulators typically use to judge fairness: under FINRA Rule 2121 guidance, equity commissions exceeding 5% of a transaction's total value are generally presumed unfair and unreasonable, per reporting from VitalLaw.
Of the full $4.4 million settlement, state regulators assessed more than $2.4 million directly in administrative fines against the two firms, with the remainder going toward investor restitution and investigation costs, according to the Secretary of the Commonwealth of Massachusetts. The firms must also certify that they have changed policies and strengthened procedures to ensure commissions are fair and reasonable going forward, AL.com reported.
Massachusetts Led the Task Force, Alabama Among the Coordinators
The Massachusetts Securities Division under Secretary William Galvin led the multi-state task force behind the agreement, and identified more than 2,000 Massachusetts investors who were overcharged a combined total of over $97,000 across both firms. Alabama's involvement reflects the state's broader role in national broker-dealer oversight — Alabama Securities Commission Director Amanda Senn previously served as NASAA Enforcement Section Chair during a related 2025 settlement, underscoring the state's continued presence on these enforcement panels.
NASAA President Elizabeth Bowling said the settlement reinforces that financial firms are responsible for reviewing their practices and treating customers fairly, according to AL.com's report. Neither Wells Fargo nor Merrill Lynch admitted or denied fault as part of the agreement. In a statement following the announcement, Merrill Lynch said it had addressed the small-dollar trade fee issues raised by regulators several years before the October 2026 resolution, as reported by ThinkAdvisor. Wells Fargo, for its part, said it remains focused on client trust while maintaining its compliance practices.
Part of a Broader Multi-Year Crackdown
This case extends a multi-year campaign by state regulators against fixed minimum trading fees. NASAA announced a $13 million settlement with Raymond James & Associates and Raymond James Financial Services in July 2023 over similar allegations involving more than 270,000 small-dollar trades, a deal that included over $8.25 million in customer restitution. In June 2025, NASAA finalized a separate $9.3 million settlement with five other major firms — Edward Jones, TD Ameritrade, LPL Financial, RBC Capital Markets, and Stifel — after finding they charged $19 million in fees across 1.12 million small-dollar trades, with minimum charges at some firms reaching $95 per transaction.
Since 2023, NASAA has announced settlements exceeding $20 million with financial institutions over similar allegations, according to AL.com. The pattern across these cases is consistent: flat minimum commissions designed for larger trades end up disproportionately punishing small retail investors, the exact dynamic regulators say drove the Wells Fargo and Merrill Lynch case.
