US SEC Investigates Charles Schwab's Robo Advisory Reporting

Fazzaco learned that the US Securities and Exchange Commission (SEC) has investigated American equities broker Charles Schwab for concerns of history disclosures of its robo advisory solutions.

In a Form 8-K filing with the securities market regulator, the broker said that it is responding to an investigation arising from a compliance examination. “The investigation largely concerns historic disclosures related to the Schwab Intelligent Portfolios® (SIP) digital advisory solution,” it added.

The broker further elaborated that it is now cooperating with the SEC in the investigation and ‘is evaluating its options’. The broker is now expecting the impact of the investigation on its second-quarter financials.

Charles Schwabs’ robo adviser services automatically allocate customer funds to the exchange-traded funds (ETFs) based on client questionnaires. The automated service received almost $64 billion in client assets as of March 31, 2021, which is 51 percent up on a year-over-year basis.

Back to the end of last year, the Financial Conduct Authority (FCA) has fined Charles Schwab UK Ltd (CSUK) ​, the UK subsidiary of Charles Schwab,  £8.96 million over its failure to protect client assets.