Charles Schwab & Co., Inc has agreed to pay a $175,000 fine and accept a censure under a settlement with the Financial Industry Regulatory Authority (FINRA) over long-running failures in reporting fractional share trades.
FINRA found that between January 2018 and May 2025 the firm failed to report, or failed to timely report, approximately 2.8 million fractional share transactions to the FINRA/Nasdaq Trade Reporting Facility (TRF) or the Over-the-Counter Reporting Facility (ORF). The regulator said the conduct violated FINRA Rules 6380A, 6622 and 2010.
A separate finding covers reporting accuracy. From July 2022 to July 2023, Schwab inaccurately reported roughly 690,000 fractional share transactions to the TRF and ORF, in violation of FINRA Rules 6380A, 6622, 7230A, 7330 and 2010.
Supervisory failures cited
FINRA also determined that, from January 2018 through May 2025, Schwab failed to establish, maintain and enforce a supervisory system, including written supervisory procedures, reasonably designed to comply with its trade reporting obligations. That finding was cited as a violation of FINRA Rules 3110(a) and (b) and 2010.
Alongside the monetary penalty and the censure, the firm is required to pay the regulatory transaction fees owed on the unreported fractional share trades, pursuant to Section 3 of Schedule A to FINRA's By-Laws.
Schwab has been a FINRA member since 1970 and conducts a general securities business. The firm has more than 17,000 registered persons and nearly 450 branches, including its headquarters in Westlake, Texas.
