NYSE Regulation Inc. has fined brokerage firm, A.G. Edwards & Sons, $900,000 for charging excessive account fees and other violations.

The regulator announced that it has censured and fined A.G. Edwards for improperly maintaining customers in non-managed fee-based accounts and charging customers excessive fees, in light of the trading activity in those accounts. The NYSE imposed a requirement on the firm to make restitution to customers relating to the overpayment of fees.

In addition, it found that the firm failed to supervise an errant producing branch office manager who made unsuitable customer trades. A.G. Edwards also failed to properly report to the NYSE statistical data on customer complaints, it said.

In settling these charges, the firm neither admitted nor denied the allegations.

“A firm’s relationship to its fee-based customers should be regularly reviewed to guard against conflicts of interest,” said Susan Merrill, chief of enforcement, NYSE Regulation. “To meet the needs of the investing public, a firm must reasonably monitor customer activity and educate customers in plain language, to ensure that this type of account is an appropriate choice.”

In March 2000, A.G. Edwards implemented a new account in which fees were charged based upon the level of eligible account assets. The firm cautioned branch managers and financial consultants suggesting that the account may not be appropriate for clients who have few transactions and who would pay substantially more in fees than under a standard commission structure.

“Though the internal communications also suggested a review of the client’s past activity before opening a Client Choice account, no policy or procedure required such a review and clients were not clearly made aware in writing when they enrolled in Client Choice that the program was not appropriate for buy-and–hold investors,” the regulator said. Yet, a review of accounts enrolled in Client Choice between 2001 and 2004 disclosed numerous accounts that had no trades for two or more consecutive years. Such customers paid substantially more in fees than they would have had they not been in the Client Choice program, it said.

A.G. Edwards will also retain an independent consultant to review the Client Choice accounts and to determine which accounts enrolled between 2001 and 2004 require restitution. After completion of the review, the firm shall make restitution to the identified customers and send to them written notification that restitution has been made by the firm, with an explanation why.