Charles Schwab said it will take a $200 million charge in the second quarter related to an SEC probe of its robo advisor platform.
The compliance inquiry relates to past disclosures around Schwab’s Intelligent Portfolios product,
The SEC filed its
Robo advisors, which typically select low-cost ETFs for investors based on their risk tolerance and automatically rebalance the portfolios, have become increasingly popular across Wall Street, with Goldman Sachs
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For just $1,000, clients can sign up for the firm’s purely digital automated advice service.
March 26 -
Amerant Bank has invested $2.5 million in Marstone to provide a digital alternative to personal wealth advisors for new and existing clients. The technology "gets planning capabilities into the hands of any customer that wants them," says Jerry Plush, the Florida bank's new CEO.
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The deal values the robo advisor at close to $966 million, according to people familiar with the matter.
June 18
While the SEC has signaled it’s more focused on cases against robo advisors, it has brought relatively few cases.
The SEC didn’t immediately respond to an email about the Schwab case.
SEC Guidance
Schwab said it had $64 billion in client assets in its robo advisor product at the end of March. The firm has more than $7 trillion in total client assets across 32 million active brokerage accounts.
Under U.S. securities rules, firms that offer advice to clients digitally are required to make the same kind of disclosures as those whose representatives make suggestions to clients over the phone or in person. The SEC put out guidance in February 2017 that detailed how its rules apply to the fast-growing industry, reminding firms to be careful not to mislead clients, to ensure disclosures are accurate and that internal compliance programs are effective.
SEC Chair Gary Gensler,
“Technology is always changing the face of finance,” Gensler said last month during City & Financial Global’s London City Week event. “But our core principles stay the same: protecting investors, facilitating capital formation for individuals and companies and maintaining fair, orderly and efficient markets between them.”
—Additional reporting by Michael J. Moore and Jesse Westbrook.