FINRA has fined Charles Schwab $2 million for net capital deficiencies and related supervisory failures.
The events in question occurred three times in 2014, ranging from $287 million to $775 million, the Wall Street regulator said.
On those dates Schwab's cash inflows exceeded what it could invest, leading the firm to transfer $1 billion to its parent company for overnight investment as an unsecured loan. Schwab, FINRA said, did not have procedures and supervisory systems in place to prevent its Treasury group from entering into unsecured transfers with affiliates that put its capital at risk
Schwab neither admitted nor denied the charges, but consented to FINRA's findings.
"Communication between risk functions within a firm is essential. In this case, Schwab failed to coordinate across its various business units which ultimately led to the firm's net capital deficiencies. Maintaining adequate net capital is critical to the protection of customer assets," Brad Bennett, FINRA's chief of enforcement, said in a statement.
Read more:
