As Wall Street profits get squeezed from engaging in less risky activity, they are making up the revenue by upping the fees for their clients.

Because of new industry rules put into place after the financial crisis, big Wall Street banks can no longer run their own hedge funds or engage in other high risk trading. That means Wall Street and its sister, the money management industry that runs mutual funds for Mom and Pop investors have increased fees to make up the lost income. However, they are in a quandary because securities regulators, finally, are becoming more attuned to nefarious practices like price gouging.

Indeed, it appears that regulators, namely the Securities Exchange Commission and FINRA, are cracking down on investment firms who are gouging investors on fees.

“A regulatory crackdown on overcharging clients was amplified this week with a move by FINRA against an investment company and by a response from an investment banker to the SEC,” recently reported Mark Schoeff in industry newspaper InvestmentNews.

“The actions highlighted the emphasis that each regulator has put on ferreting out excessive fees, and could reverberate in the retail investment adviser sector,” he reported. “Both FINRA and the SEC have made scrutiny of fees a regulatory and examination priority this year.”

FINRA, the securities industry’s self-regulator, recently leveled a $350,000 fine against Fidelity Investments for what it said was “inappropriately charging more than 200,000 clients a total of $2.4 million for certain transactions in fee based accounts,” according to Schoeff, in an article titled “Regulators bare their teeth on excessive fees.”

Do the math, that means that Fidelity was overcharging roughly $12 per client involved in the matter. While that doesn’t sound like a lot, that can certainly add up to a snappy profit.

Take solace, Mom and Pop investors. Fee gouging is universal, and small customers aren’t the only ones being gouged. According to the SEC, private equity firm KKR & Co. was forced to refund money to its institutional and sophisticated investors – think of pension funds and asset managers with billions of dollars – who may have been overcharged on fees, according to a Wall Street Journal analysis cited by Schoeff.

And there’s more to come on the fee gouging issue, according to Schoeff. The next shoe to drop may be the agency releasing results of its examination sweep regarding mutual fund distribution payments.

Launched almost two years ago, the initiative is designed to determine whether payments to brokerage firms for marketing funds are being disguised as payments for other services. The sweep has been completed and the SEC staff is preparing a report, according to an attorney cited by Schoeff.

“I suspect that they are going to take a pretty strong stand on this,” the attorney said. “I wouldn’t be surprised if we’ll see enforcement action and new rule proposals.”

Meanwhile, big money private equity firms are also falling short in the arena of fees. Indeed, “the SEC is going after private equity firms because the agency has been finding in examinations ‘high rates of deficiency’ on the collection of fees and allocation of expenses, Andrew Bowden, director of the SEC’s Office of Compliance Inspections and Examinations,” according to Schoeff.

In the old days, before the crash of 2008, Wall Street made – and then lost – billions by selling esoteric mortgage products tied to the real estate boom. Few truly understood what a collateralized mortgage obligation was, but who cared? The money was tremendous.

That party, for the bankers, was great while it lasted. Now, bankers are funding their yachts and private jets by gouging their customers with excessive fees. And the regulators are taking notice.

Zamansky LLC are investment and stock fraud attorneys representing investors in federal and state litigation and arbitration against financial institutions.