On July 1, 2021, Charles Schwab disclosed that the Company had been “responding to an investigation by the U.S. Securities and Exchange Commission (SEC) arising from a compliance examination.” The investigation primarily concerned “historic disclosures related to the Schwab Intelligent Portfolios® (SIP) digital advisory solution.” Charles Schwab further disclosed its “second quarter 2021 financial results will include a liability and related non-deductible charge of $200 million.”
On this news, Charles Schwab share prices dropped $0.77, or approximately 1%, to close at $72.80 on July 2, 2021.
On June 13, 2022, the SEC announced that it “charged three Charles Schwab investment adviser subsidiaries” who “agreed to pay $187 million to harmed clients to settle the charges.” The SEC charged Charles Schwab with misleading investors that used its robo-adviser product, Schwab Intelligent Portfolios. Instead of the touted “disciplined portfolio construction methodology” that sought “optimal return[s]”, Charles Schwab’s “own data showed that under most market conditions, the cash in the portfolios would cause clients to make less money even while taking on the same amount of risk.”
On this news, Charles Schwab share prices dropped $1.98, or approximately 3%, to close on June 13, 2022 at $60.24.