Founded in 1971, Charles Schwab & Co., Inc. (“Schwab”) is one of the largest securities broker-dealers and registered investment advisers in the world. Schwab, owned by Schwab Holdings, Inc., is a savings and loan holding company, which through its subsidiaries engages in securities, brokerage, banking, and related financial services. As of August 2022, Schwab had $7.13T in assets under management (AUM). The publicly-traded company, which is headquartered in San Francisco, California, has over 1,200 financial advisors, and operates more than 330 brick-and-mortar locations in 46 states.
Financial Misconduct at Charles Schwab & Co., Inc.
Schwab is licensed by the Financial Industry Regulatory Authority (FINRA), and as such is legally obligated to ensure its brokers are acting lawfully in the interest of their investors. If a client suffers losses as a result of negligent behavior or misconduct from a broker, then the firm may be held legally responsible to repay the damages.
Schwab and brokers backed by Schwab have a long history of misconduct and complaints, with 293 disclosures (56 regulatory; 3 civil; 232 arbitrations; and 2 bond) listed on FINRA’s BrokerCheck Report. As a result, the firm has paid out millions of dollars since its inception.
In January 2011, Schwab agreed to pay $118.9M in order to settle civil charges brought by federal regulators regarding failure to disclose the risks of a short-term bond fund, “YieldPlus,” to investors. The firm also agreed to pay $235M to settle investor lawsuits. Former Schwab president, Randall Merk, also agreed to a $150,000 fine.
In December 2020, Schwab’s UK affiliate reached a settlement for $8.9+M in disgorgement and restitution after an investigation by the Financial Conduct Authority (a regulatory body in the UK) into activities in the UK during August 2017 to April 2019, which allegedly breached multiple regulations.
In November 2021, a FINRA arbitration panel ordered Schwab to pay $934,806.69 for breach of fiduciary duty, suitability, breach of contract, and negligence.
In June 2022, Schwab agreed to pay $187M to settle an SEC investigation into the firm’s robo-advisor, Schwab Intelligent Portfolios. The SEC charged Schwab with misleading investors that used Schwab Intelligent Portfolios. The agency found that from 2015 to 2018, instead of employing a “disciplined portfolio construction methodology,” the firm’s own data showed that under most market conditions, the cash in the portfolios would cause clients to make less money even while incurring the same amount of risk. As a result of the news, Schwab’s stock fell 3.2%, further increasing investor losses.
A regulatory case against Schwab was brought by the state of Massachusetts in July 2021. Schwab is alleged to have failed to have policies and procedures in place to adequately monitor accounts on its platform for payments known to unregistered investment advisers and investment adviser representatives. This allegedly enabled an unregistered investment adviser to receive payments for unlawful services. The case is currently pending.
You May Have a Claim. Contact Our Firm Now!
It takes a great deal of financial and professional resources to challenge an investment firm like Charles Schwab, perhaps one of the most powerful investment firms in the world. Because Meyer Wilson’s securities fraud attorneys practice exclusively in investment fraud law, we have developed the right resources to help clients reclaim their lost assets, no matter how big or well-prepared Charles Schwab may be.
Our firm can conduct detailed investigations that allow us to aggressively and confidently pursue claims in federal and state courts, as well as in arbitration with FINRA, the American Arbitration Association, and private arbitration. We even represent international clients who have claims against FINRA-licensed U.S. firms. All told, we have helped hundreds of clients reclaim hundreds of millions of dollars from firms like Charles Schwab.
If you lost more than $75,000 in investments after investing your hard-earned money with Charles Schwab, we'd like to hear from you. To determine whether you have a case against Charles Schwab for your losses, call an investment fraud lawyer at our firm or complete our online form to request a free case evaluation.