Charles Schwab is trying to get the class-action complaint that was filed against it in September by three investors over cash sweeps in its robo-advice service thrown out.
In a motion filed by Schwab in U.S. District Court for the Northern District of California in Oakland on Monday, the firm asked that the court dismiss the case "for lack of jurisdiction and, in the alternative, for failure to state a claim on the merits."
John T. Jasnoch, an attorney with law firm Scott + Scott in San Diego who is representing the plaintiffs, did not immediately respond to a request for comment on Thursday.
The three investors who sued Schwab had alleged the firm violated its fiduciary duties by "wrongfully overconcentrating" clients' Schwab Intelligent Portfolios robo-advisor accounts in cash positions that ended up costing them hundreds of millions of dollars.
In the complaint, filed on Sept. 10, Lauren Marie Barbiero, Kimberly Jo Lopez and William Kenneth Lopez alleged that Charles Schwab Investment Advisory, the subsidiary that manages the firm's robo-advisor program, kept the plaintiffs' and other clients' Schwab Intelligent Portfolios accounts "overconcentrated in cash positions," costing investors hundreds of millions of dollars and violating the firm's fiduciary duties.
'Doomed to Fail'
On Feb. 24, 2022, or as soon as the matter may be heard in the Oakland court, Schwab will move to dismiss the complaint, it said in Monday's court filing.
The complaint "rests entirely on state-law claims that Congress forbade" in the Securities Litigation Uniform Standards Act, Schwab alleged. The plaintiffs "assert a classic securities claim: that [Schwab] misrepresented to SIP clients how it would invest their funds in certain nationally traded securities and instead caused Plaintiffs to be overly invested in cash deposits at an affiliated bank," according to Schwab.
