Charles Schwab to pay $187 million to settle SEC charges that it misled robo-advisor clients on fees

cnbc.com:

Charles Schwab agreed to pay $187 million to settle an SEC investigation into alleged hidden fees charged by the firm's robo-advisor, Schwab Intelligent Portfolios, according to an agency announcement on Monday.

«Robo-advisor» is shorthand for a digital investment service that uses algorithms to judge how to allocate individuals' money among asset classes such as stocks, bonds and cash.  

From March 2015 through November 2018, Schwab didn't disclose to clients that its robo-advisor allocated funds «in a manner that their own internal analyses showed would be less profitable for their clients under most market conditions,» the SEC claimed.

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As part of the settlement, three Schwab subsidiaries — Charles Schwab & Co., Charles Schwab Investment Advisory and Schwab Wealth Investment Advisory — agreed to pay a $135 million civil penalty and an additional $52 million in disgorgement and interest to affected clients.

In a statement issued Monday, Schwab neither admitted nor denied the allegations and said the firm is «pleased to put this behind us.»

«We believe resolving the matter in this way is in the best interests of our clients, company and stockholders as it allows us to remain focused on helping our clients invest for the future,» according to the statement. «As always, we are committed to earning our clients' trust every day and work diligently to maintain the highest standards for professional conduct throughout our organization.»

Robo-advisors are getting more popular. They began appearing around 2008, during the advent of the iPhone