Charles Schwab Inc. reported Tuesday that it expects its fourth-quarter earnings to be lower then what was previously expected, Reuters reports. The company projects that profits will be 14 cents per share, opposed to the expected 16 cent per share previously expected by Reuters Estimates.

The firm blamed the shortfall on fee cuts and the cost of a national advertising campaign, which it said would reduce earnings by $40 million before taxes, and severance charges, which it said would reduce earnings by another $10 million. In September, Schwab announced it would eliminate account service fees and order handling charges, its seventh price cut since May 2004.

Meanwhile, Schwab was fined $1 million by the New York Stock Exchange, for supervisory and control violations on accounts managed by outside advisers. NYSE said that between 1998 and 2003, some advisers were misappropriated customer assets by forging authorization letters and checks. Though no Schwab employees were involved, the firm was held responsible for not regulating the advisers closely enough.

"This case is a stern reminder that firms must have adequate procedures to supervise and control transfers of assets from customer accounts," said Susan Merrill, the Big Board's enforcement chief. "It goes to the heart of customers' expectations that their money is safe."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.