Charles Schwab Corp. said it will take a $200 million charge in the second quarter related to a U.S. Securities and Exchange Commission probe of its robo-advisor platform.
The compliance inquiry relates to past disclosures around the firm’s Schwab Intelligent Portfolios product, according to a regulatory filing Friday. The company said it’s been cooperating with the SEC and its ultimate liability may differ from the amount it’s earmarking now.
The SEC filed its first enforcement actions against robo-advisors in December 2018, accusing Wealthfront Advisers LLC and another firm of making false statements about investment products and publishing misleading advertisements.
Wealthfront, which had more than $11 billion in client assets under management at the time, agreed to pay a $250,000 penalty without admitting or denying the findings.
Robo-advisors, which typically select low-cost exchange-traded funds for investors based on their risk tolerance and automatically rebalance the portfolios, have become increasingly popular across Wall Street, with Goldman Sachs Group Inc. rolling out such a product earlier this year.
On its website, Schwab predicts assets managed by robo-advisors will grow to $460 billion next year, from $47.3 billion in 2015.
While the SEC has signaled it’s more focused on cases against robo advisors, it’s brought relatively few cases.
In one last month, the agency said it settled claims against a Canadian robo-advisor, Emperor Investments Inc., after the firm agreed to pay $25,000 over allegations it posted misleading performance data on its website.