Wells Fargo and Merrill Pay $4.4M to Eight States Over Minimum Commissions on Tiny Trades

Merrill Lynch and two Wells Fargo broker-dealers will pay a combined $4.4 million and refund clients after eight states found they charged outsized minimum commissions on very small stock trades.

Two wirehouse brokerage arms have agreed to refund clients who paid outsized minimum commissions on very small stock orders, closing an eight-state inquiry run by the Massachusetts Securities Division. Merrill Lynch and two Wells Fargo broker-dealers (Wells Fargo Clearing Services plus Wells Fargo Advisors Financial Network) will pay a combined $4.4 million, according to an Oct. 15 announcement from the North American Securities Administrators Association. The states say the firms applied flat minimum charges to more than 256,000 equity trades over five years, so that customers buying or selling a few hundred dollars of stock sometimes gave up a large slice of the order to the commission.

Wells Fargo accounts for most of the money. Regulators tallied nearly $3.9 million in unreasonable commissions across 228,243 trades at the two Wells entities between Sept. 30, 2020, and Oct. 1, 2025. Merrill's figure for the identical window is nearly $549,000. That is far smaller, but it is not a rounding error: it places the Bank of America brokerage in the same category of finding as its rival, and it makes Merrill the latest of the largest national brokerages to answer the states on this specific issue. NASAA did not break out a Merrill trade count, and the materials reviewed for this story do not state Merrill's minimum charge.

Massachusetts led the work, joined by Washington, Texas, New Jersey, Montana, Missouri, Iowa and Alabama, for eight states in all. Customers in the participating states are due refunds of the excess plus interest. Both Wells entities and Merrill must also pay administrative fines and investigative costs, and each has to certify that its policies and procedures now keep commissions fair and reasonable. Secretary of the Commonwealth William Galvin's office put the combined fines owed to the participating states at more than $2.4 million and said more than 2,000 Massachusetts investors will get restitution. The state-by-state split of the fines was not published in the releases reviewed.

The mechanics follow a familiar pattern. Wealth Management reported that the Massachusetts consent order against Wells describes a $55 minimum commission on certain equity trades that stayed in place through May 2023, a charge that could reach 15% of principal on the smallest orders, and that the order faults the firm for not reasonably supervising trades carrying that minimum. Regulators measure these charges against a long-standing 5% benchmark: FINRA's guidance under Rule 2121 treats a markup or commission above 5% of the trade's value as presumptively hard to justify, and state orders in this series have used the same threshold to compute refunds.

A Merrill spokesperson told Wealth Management the firm dealt with the underlying issues several years ago and welcomed the resolution. Wells Fargo's spokesperson pointed to the firm's compliance and oversight practices and its focus on clients.

This is the third wave of a campaign Massachusetts has been running since 2023. The first round, disclosed by NASAA in July 2023, cost Raymond James & Associates and Raymond James Financial Services $13 million after a probe led by Alabama, California, Illinois, Massachusetts, Montana and Washington. That case covered more than 270,000 trades and about $8.25 million in excess commissions; the Massachusetts order noted that some charges topped 90% of the trade's principal, and California's order identified a $75 minimum. In June 2025, a second round reached Edward Jones, LPL Financial, RBC Capital Markets, Stifel and TD Ameritrade. Galvin's office said those five firms had collected nearly $19 million in unreasonable commissions and faced up to $9.87 million in fines, with minimums running as high as $95; NASAA described that round as a $9.3 million settlement. Individual state orders from that round show the range of minimums, from $30 at LPL in Washington's order to $40 plus a $5 fee at Stifel in Delaware's. Galvin's office now counts $32 million in settlements across the six firms in the first two rounds. New Jersey, absent from the working group in 2025, joined for this round.

For both firms, the settlement lands on top of a busy few years with federal regulators, as shown in their BrokerCheck records. Wells Fargo Clearing Services paid a $28 million SEC penalty and Wells Fargo Advisors Financial Network paid $7 million in January 2025 over policies governing advisory cash sweep programs. In December 2024, Wells Fargo Clearing admitted SEC findings that it submitted inaccurate blue sheet trade data and paid $900,000. FINRA fined it $400,000 in September 2024 and ordered restitution and disgorgement tied to short-term trading of syndicated preferred stock and closed-end funds, then fined it $1.25 million in January 2026 over municipal securities settlement failures and $125,000 in April 2026 over fractional-share trade reporting. Merrill paid a $25 million SEC penalty on the same January 2025 day over its own cash sweep policies. In September 2024, the SEC ordered it to pay $2 million in disgorgement, $800,000 in interest and a $1 million penalty for not telling some clients that a third-party manager exceeded their chosen options exposure. In June 2026, it agreed to a $7.5 million SEC penalty over suspicious activity report filings that its bank parent's monitoring system missed.

The dollar amounts here are small for firms of this size. The pattern is the point: a flat minimum built for a typical order quietly penalizes the client with a tiny position, and states have now pursued eight brokerage firms for it across three rounds, a fact advisors at those firms may hear about from clients who receive refund checks.