Each month, FINRA publishes disciplinary actions involving firms and registered individuals that violated FINRA rules, federal securities laws, regulations, or Municipal Securities Rulemaking Board requirements.
The actions reported in August 2026 covered deficiencies involving trade reporting, anti-money laundering programs, customer complaints, Regulation Best Interest, and municipal securities disclosures. Many were resolved through Letters of Acceptance, Waiver and Consent, in which the firms accepted the sanctions without admitting or denying FINRA’s findings.
Here are the five largest fine amounts included in FINRA’s August report and what compliance teams can learn from them.
1. $1.1 Million: Trade and CAT Reporting
The largest fine was $1.1 million for extensive trade reporting, Consolidated Audit Trail reporting, and supervisory failures involving fractional shares.
FINRA found that the firm:
- Omitted 211 million fractional share trades from reports
- Submitted inaccurate or incomplete CAT data
- Traded fractional shares during market interruptions
The reporting failures included approximately 2.1 billion inaccurate CAT events and millions of unreported fractional share and route cancellation events.
The firm also executed more than 110,000 fractional share trades during trading halts, pauses, and market-wide circuit breakers. More than 52,000 resulted in inferior prices across 11,719 customer accounts, leading to more than $55,000 in restitution.
The firm lacked adequate written procedures and supervisory reviews for these obligations. Its CAT reviews also did not compare submitted data against underlying order and trade records to verify accuracy.
2. $335,000: AML and Off-Channel Communications
A firm was fined $335,000 for deficiencies involving its anti-money laundering program, off-channel communications, and required regulatory filings.
FINRA found that:
- AML procedures did not reflect investment banking risks
- Suspicious IPO activity was not adequately investigated
- Off-channel messages were not retained or reviewed
- Required offering documents were filed late
Independent AML testing conducted between 2022 and 2024 did not adequately evaluate the risks connected to the firm’s business. The firm was also aware that representatives, including management, used unapproved messaging platforms, and supervisors sometimes participated in those communications.
Consequently, hundreds of business-related messages were not retained or reviewed. Required documents were also filed late in approximately 25 public offerings, including eight filings that were more than 30 days late.
3. $225,000: Customer Complaint Reporting
A $225,000 fine involved failures to identify and report thousands of written customer complaints submitted through post-call surveys.
The firm’s review process had three central weaknesses:
- Search terms were designed for banking complaints
- Only automatically flagged responses received additional review
- Thousands of reportable complaints were not identified
Because the search terms were not designed for broker-dealer complaints, the firm frequently failed to identify reportable survey responses that did not trigger an automated flag.
FINRA found that the firm’s supervisory system and written procedures were not reasonably designed to identify and report these complaints. The firm later conducted a lookback, addressed the outstanding complaints it identified, and suspended the written commentary feature in its surveys.
The action demonstrates that every channel collecting customer feedback needs an appropriate review and escalation process.
4. $210,000: AML Surveillance
A firm was fined $210,000 because its AML surveillance was not reasonably designed for the products, transactions, and customer activity it handled.
FINRA identified several weaknesses:
- Spoofing alerts did not fit thinly traded options
- Alerts were closed with generic comments
- Wash-trading patterns lacked documented investigation
- Money-movement reviews lacked key customer context
The firm’s spoofing alert only triggered when an order was canceled within seconds of another order’s execution. FINRA found that this parameter was not appropriate for thinly traded options, where orders may remain open for longer periods.
The firm also lacked appropriate procedures for ongoing customer due diligence and relied on its clearing firms to identify changes affecting customer risk.
Although automated surveillance was in place, its settings and review process did not reflect the firm’s actual activity. Surveillance technology must be tested and adjusted as products, transactions, and risks change.
5. $175,000: Two Firms Tied
Two firms received fines of $175,000 for separate compliance failures involving municipal securities disclosures and Regulation Best Interest.
Municipal Securities Disclosures
The first $175,000 fine involved a failure to provide required market discount disclosures for approximately $87 million in municipal securities purchases.
FINRA found that:
- Self-directed customers missed required tax disclosures
- Procedures did not cover the self-directed platform
- No process verified timely disclosure delivery
Customers were not informed that part of their investment return might be taxed as ordinary income. The firm later provided the disclosures and offered to compensate customers who demonstrated that they incurred additional tax liability.
Regulation Best Interest
The second $175,000 fine involved Regulation Best Interest violations, supervisory failures, and inadequate private placement due diligence.
According to FINRA:
- Speculative bonds were recommended to non-speculative customers
- Four of the ten affected customers were seniors
- Procedures lacked defined escalation requirements
- Private placement concerns were not adequately investigated
The unresolved concerns included missed investor distributions, a high debt-to-equity ratio, and an issuer’s inability to redeem approximately $30 million in previously issued notes at maturity.
In addition to the fine, the firm was ordered to pay more than $345,000 in restitution.
Compliance Takeaways
The largest fines reported in August point to four areas compliance teams should review:
- Align surveillance with actual risk. Automated alerts, AML reviews, and search terms should reflect the firm’s products, customers, transaction activity, and communication channels.
- Validate reporting systems. Firms should compare regulatory submissions against source records to confirm that information is complete and accurate.
- Define review and escalation. Written procedures should identify who conducts reviews, what information must be considered, when concerns are escalated, and how conclusions are documented.
- Evaluate customer impact. Supervisory reviews should consider whether control failures resulted in unsuitable recommendations, inferior pricing, missed disclosures, or other customer harm.
Across these actions, the recurring problem was not simply that a policy was missing. In several cases, firms had systems or procedures in place, but those controls were not properly designed, tested, or followed. Effective supervision requires firms to confirm that their controls work as intended as their business, products, and risks change.
