Firm Failed to Accurately Calculate Bank Deposit Program Fees and Failed to Disclose Retention of Surplus Interest Earned from Customers’ Funds
WASHINGTON, December 30, 2025–(BUSINESS WIRE)–FINRA has ordered American Portfolios Financial Services, Inc. (APFS) to pay $4.6 million in restitution to customers impacted by the firm’s inaccurate representation of how it calculated its fees and its retention of undisclosed, surplus interest. The fees and surplus interest were earned from customers’ funds in the firm’s bank deposit program between April 2018 and September 2022. The firm was also fined $550,000 for the violations.
Bank deposit programs allow broker-dealers to automatically transfer customers’ uninvested cash balances from their brokerage accounts into interest-bearing, Federal Deposit Insurance Corporation-insured bank accounts. These programs are designed to help customers earn interest on cash that might otherwise sit idle. During the period at issue, APFS enrolled approximately 85,000 customers in its bank deposit program.
From April 2018 through September 2022, APFS provided customers with inaccurate disclosures about how it calculated per-account fees for customers enrolled in its bank deposit program. Rather than using a formula tied to the Federal Funds Target rate, as stated in the disclosures, APFS first determined customer yields based on factors such as the rates paid by its competitors and retained the remaining interest paid by the participating banks, less other administrative fees, as its fee. Over the entire relevant period, APFS collected more than $3 million in aggregate fees beyond what the disclosed formula would have yielded.
APFS also did not disclose that it retained surplus interest—totaling approximately $1.25 million—when interest rate changes created excess proceeds. Finally, APFS incorrectly credited the retained excess administrative fees and surplus interest as revenue in its net capital calculation, resulting in the firm filing inaccurate monthly reports with FINRA.
“While bank deposit programs may offer useful features to customers, it is important for firms to ensure compliance with a range of relevant FINRA and SEC rules,” said Bill St. Louis, Executive Vice President and Head of FINRA Enforcement at FINRA. “Firms must ensure accuracy in customer communications, including how fees are calculated and what interest customers will earn. When firms fail in that obligation—whether through inaccurate formulas, undisclosed interest retention or inadequate supervisory controls—customers can suffer real financial harm, as demonstrated by the substantial restitution required in this case.”