Pershing is being fined and censured by Finra for failing to report fractional share trades executed for customers for 16 years, the self-regulatory agency disclosed Tuesday.
The BNY Mellon company lacked a supervisory system for complying with the required reporting to the Finra/Nasdaq Trade Reporting Facility and the Over-the-Counter Reporting Facility, with about five million such trades going unreported during a sample time period between June 2012 and June 2023.
“As a result, Pershing did not pay the regulatory transaction fees associated with these trades,” Finra stated Tuesday in a letter of acceptance, waiver, and consent signed by Pershing.
The regulator requires that trades made for customers that include fractions of full shares be reported and have a transaction fee paid.
As part of the agreement, Pershing is paying a $175,000 fine and is supporting “an undertaking to pay the regulatory transaction fees as required for unreported fractional share trades executed between June 1997 and June 2023,” according to the disclosure.
“Pershing is pleased to have resolved this matter. We take our regulatory and compliance responsibilities very seriously,” a company spokesperson said in an email statement to InvestmentNews.
Under Finra’s trade reporting rules, its member firms have to provide data about equity securities transactions within 10 seconds of such trades. While fractional shares can’t be entered into the systems, trades must be rounded up to full shares for reporting purposes.
Last year, the regulator included fractional share trade reporting in its report on its examination and risk monitoring program.
“The data that members report has a direct impact on the accuracy of public information FINRA disseminates,” the regulator said in the Pershing letter, adding that a lack of disclosure can affect its surveillance patterns.
“Finra relies on the accuracy of trade reporting to reconstruct and review the activities of market participants in order to safeguard the integrity of the securities markets and protect investors,” the letter stated. “Accurate recordkeeping also enables member firms to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations.”
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
