In a statement, Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said, “Schwab’s conduct was egregious, and today’s action sends a clear message to advisers that they need to be transparent with clients about hidden fees and how such fees affect clients’ returns.”
The SEC said without admitting or denying the agency’s findings, Schwab’s investment advisor subsidiaries, agreed to a cease-and-desist order prohibiting them from violating the antifraud provisions of the Investment Advisers Act of 1940, censuring them, and requiring them to pay about $52 million in disgorgement and prejudgment interest, and a $135 million civil penalty.
They also agreed to retain an independent consultant to review their policies and procedures relating to their robo-adviser’s disclosures, advertising, and marketing, and to ensure that they are effectively following those policies and procedures, the SEC said.