Defendant Name: Charles Schwab Investment Advisory, Inc.

Defendant Type: Subsidiary of Public Company

Document Reference: 2022-104

Document Details

Legal Case Name In the Matter of Charles Schwab & Co., Inc., Charles Schwab Investment Advisory, Inc., and Schwab Wealth Investment Advisory, Inc.
Document Name Schwab Subsidiaries Misled Robo-Adviser Clients about Absence of Hidden Fees
Document Date 13-Jun-2022
Document Format Administrative Proceeding
File Number 3-20897
Allegation Type Investment Advisers/Investment Companies
Document Summary The SEC stated that: "[It] charged three Charles Schwab investment adviser subsidiaries for not disclosing that they were allocating client funds in a manner that their own internal analyses showed would be less profitable for their clients under most market conditions. The subsidiaries agreed to pay $187 million to harmed clients to settle the charges."

Disgorgement & Penalty Information

Resolutions
Cease and Desist Order
Censured
Compliance Related Independent Consultant
Monetary Penalties:

Disgorgement

Individual:     Shared:     $52,000,000.00
Shared with: Charles Schwab & Co., Inc.; Schwab Wealth Investment Advisory, Inc.

Civil Penalty

Individual:     Shared:     $135,000,000.00
Shared with: Charles Schwab & Co., Inc.; Schwab Wealth Investment Advisory, Inc.

Pre-Judgment Interest

(Penalty was noted in document, but no amount was listed)

Total Penalty

Individual:     Shared:     $187,000,000.00
Shared with: Charles Schwab & Co., Inc.; Schwab Wealth Investment Advisory, Inc.

Related Documents:

34-95087 13-Jun-2022 Administrative Proceeding
Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
On June 13, 2022, the SEC instituted settled administrative and cease-and-desist proceedings against Charles Schwab & Co., Inc., Charles Schwab Investment Advisory, Inc. and Schwab Wealth Investment Advisory, Inc., stating: "From March 2015 through November 2018, certain investment adviser subsidiaries of The Charles Schwab Corporation made false and misleading statements in their Form ADV filings about the cash component of their robo-adviser service, Schwab Intelligent Portfolios (“SIP”)."
34-95087-s 13-Jun-2022 Administrative Summary
Schwab Subsidiaries Misled Robo-Adviser Clients about Absence of Hidden Fees
The SEC stated that "[It] charged three Charles Schwab investment adviser subsidiaries for not disclosing that they were allocating client funds in a manner that their own internal analyses showed would be less profitable for their clients under most market conditions. The subsidiaries agreed to pay $187 million to harmed clients to settle the charges."