Charles Schwab Fined $175,000 by FINRA Over Fractional Share Trade Reporting Failures

Charles Schwab has been censured and fined $175,000 by the Financial Industry Regulatory Authority (FINRA) over deficiencies in how it reported fractional share transactions, according to a Letter of Acceptance, Waiver, and Consent.

The regulator found that between January 2018 and May 2025 the broker-dealer either failed to report or failed to report on time roughly 2.8 million fractional share trades to the relevant trade reporting facilities, in violation of its reporting obligations. Separately, FINRA said Schwab inaccurately reported about 690,000 fractional share transactions between July 2022 and July 2023.

What drove the reporting gaps

Many of the unreported trades stemmed from Schwab liquidating fractional shares in a principal capacity when customer accounts were transferred through a service that does not support the transfer of fractional shares, FINRA said. The firm also did not pay the regulatory transaction fees tied to those trades. The inaccurate reports, which contained incorrect execution times and left out a required prior reference price modifier, were described by the regulator as an unintended consequence of a system enhancement that Schwab fixed in July 2023. Late reports were attributed mainly to system latency around the market open during periods of elevated volume and volatility.

FINRA also determined that from January 2018 through May 2025 Schwab did not establish and maintain a supervisory system reasonably designed to meet its trade reporting responsibilities.

Schwab consented to the findings without admitting or denying them. Alongside the censure and the $175,000 fine, the firm agreed to pay the outstanding regulatory transaction fees associated with the trades. The case adds to a series of FINRA enforcement actions focused on trade reporting and supervisory controls at retail brokerages.