Schwab Pays Record $187 Million Fine in Robo-Adviser Case (1)

Charles Schwab Corp. agreed to pay a record $187 million penalty to federal securities regulators to settle allegations that it failed to tell clients about the hidden costs of its robo-advising product, which was investing client money in a way that often lowered their returns.

Schwab told investors that the amount of cash held in its robo-adviser portfolios was determined through a “disciplined portfolio construction methodology” when it really was set for business reasons and to compensate for not charging an advisory fee, the US Securities and Exchange Commission said on Monday. The firm’s own analysis of its robo-adviser showed ...