The Financial Industry Regulatory Authority Inc. last week fined Charles Schwab & Co. Inc. $350,000 for failing to fully disclose information about exchange-traded notes to thousands of customers over a period of almost five years.
From January 2016 to December 2020, Schwab sent trade confirmations to 765,000 clients that did not disclose that the exchange-traded notes were callable and that early redemption of the notes could affect their yields. As a result, Schwab violated industry rules around disclosure.
Schwab self-reported the matter and accepted the settlement with Finra without admitting or denying any of Finra's findings.
Finra's settlement with Schwab was released last Thursday, the same day as the regulator's agreement with TD Ameritrade Clearing Inc., which Finra fined $500,000 for failing to disclose fully information about callable securities, including ETNs and preferred securities, to millions of customers over five years.
Schwab acquired TD Ameritrade in 2020.
"This settlement resolves an unintentional oversight about the placement of certain information on trade confirmations for a few securities," a Schwab spokesperson wrote in an email. "While that same information was available in other materials provided to clients, including the prospectus, we promptly notified Finra over two years ago when we discovered the oversight and immediately corrected the issue."
Over the period in which it violated the rule, Schwab used an outside or third-party vendor to provide it with redemption information about securities, including ETNs, according to Finra. Schwab then used the redemption information in the transaction confirmations it sent to customers.
However, for 183 ETNs, the vendor provided inaccurate or incomplete information about redeemable ETNs. For an additional 15 ETNs, Schwab received accurate redemption information from its vendor but inaccurately stated on transaction confirmations to clients that the ETNs were not redeemable, according to Finra.
Advisors with clients who own second homes in New York City face fresh uncertainty as the city seeks a stay and plans an appeal.
Meanwhile, a deal in the Midwest gives NorthRock Partners a new office in Wisconsin, while two teams join OnePoint BFG in Georgia and Atlanta.
These challenges are “changing the economics we see retirement savers face,” said Christopher Ceder of Goldman Sachs Asset Management
Richardson firm joins as Kestra builds out its platform with new leadership, technology, and expanded planning tools.
Retiring RIA seller David Laidlaw alleges the Carnegie valued his stake on $11.7 million EBITA while pitching potential buyers on $21.3 million.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
