(888) 637-5510

Written by 12:08 pm Blog, Current Investigations, Securities Fraud Articles

Schwab Intelligent Portfolios “Robo-Investment” Investigation

Schwab Intelligent Portfolios "Robo-Investment" Program - Lawsuit Investigation, featured by top securities fraud attorneys, The White Law Group

Schwab Intelligent Portfolios Complaints – Securities Fraud Attorneys

The White Law Group is investigating potential claims on behalf of customers who invested through the Schwab Intelligent Portfolios (SIP) “robo investment” program. Recent reports indicate that Charles Schwab Investment Advisory reportedly may have mismanaged customer accounts by over-allocating to cash.  The cash was allegedly deposited into Charles Schwab Bank through a cash sweep program. Customers purportedly received interest on their cash at the rate of approximately 0.01%. 

It has also been reported that Charles Schwab Investment Advisory has allegedly allocated between 6% and 30% of customer assets to cash in recent years. The specific allocation is apparently determined by the customer’s risk profile. With low interest rates and rising stock prices, an over-allocation to cash could potentially have reduced its customers’ returns. 

For Schwab, on the other hand, the cash sweep program very possible could have been highly profitable. Schwab has allegedly received net margin interest on the cash deposited at Charles Schwab Bank at rates of approximately 1%. Upon information and belief, for customer assets invested in Schwab-managed ETFs, Schwab appear to earn fees in connection with the management of the ETF, but these fees are typically less than 1%. Schwab therefore reportedly appears to be incentivized to over-allocate to cash since it makes more money on customer assets invested in cash than in other investments such as Schwab-managed ETFs. 

Registered Investment Advisors like Charles Schwab Investment Advisory owe fiduciary duties to their customers. It appears possible, however, that Charles Schwab Investment Advisory may have allowed its SIP program to over-allocate to cash, thereby putting its own interests ahead of its customers in violation of its fiduciary obligation. 

Filing a Complaint against your Brokerage Firm 

This information is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois. 

If you have suffered significant losses and want to learn more about your legal options, please contact the securities attorneys of The White Law Group at 888-637-5510 for a free consultation. 

For more information on The White Law Group, visit https://www.whitesecuritieslaw.com. 




Tags: , , , , , , Last modified: December 12, 2022