Search Site

SEC Fines Charles Schwab $2.8 Million for Failure to Report Suspicious Transactions

The U.S. Securities and Exchange Commission (SEC) recently fined Charles Schwab & Co., Inc. $2.8 million for failing to report a series of suspicious transactions by independent investment advisors it stopped from using the company to handle client accounts.

Under the Bank Secrecy Act, all broker-dealers are required to report any such suspicious transactions that occur through their firms, which helps federal agencies uncover possible violations of securities laws.

Case background

According to the SEC complaint, Schwab terminated 83 independent investment advisors in 2012 and 2013 for engaging in practices that violated its own internal policies. The SEC alleges at least 47 of those advisors had engaged in transactions Schwab either knew, suspected or had reason to suspect were suspicious and would therefore require reporting under the Bank Secrecy Act. Schwab allegedly did not file reports on suspicious transactions of 37 of those advisors.

Some of the alleged suspicious activities included charging client accounts exorbitant advisory fees, posing as clients to confirm or effect transactions in the client account, executing client trades without being registered properly as an advisor and undisclosed conflicts of interest.

The complaint also alleges Schwab did not file reports when the terminated advisor was suspected of misuse of client funds and the client had not submitted a complaint. The settlement allows Schwab to avoid admitting liability or denying its culpability.

If you work for a financial institution you believe has violated the Bank Secrecy Act or committed other forms of securities law violations, consult a trusted Dallas whistleblower lawyer at Kardell Law Group. You will learn how you can report this wrongdoing and potentially be compensated for the information you provide.

Awards & Honors
Our Office
  • Dallas Office
    4514 Cole Ave
    Dallas, Texas 75205
    Phone: 214-306-8045
    Fax: 469-729-9926
As Seen In
In his new book, "Standing Up to China: How a Whistleblower Risked Everything for His Country," former client & Author, Ashley Yablon, quotes Attorney Steve Kardell about Whistelblower Law.
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Incredible knowledge of employee related concerns and equally brilliant knowledge of health care regulations, standards of practice. I would recommend this firm to anyone."  -V.B.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

  • "Never thought my career would end like it did after 30 years of service. I was part of the first round of the so called reduction of force. I asked myself how can I be part of this with 30 years of seniority. How did they pick these 90 plus employees? Now, the culture of this organization made you question every decision they made. It wasn’t what you knew it’s was a culture of who you know. Nonetheless, I did not accept their severance package. I immediately starting looking for an attorney who would take on my case. After the initial call to Steve I had hope again. He was open and honest about everything and reassured me he would do his best for me, and he did. I had an awesome outcome. Thanks Steve you’re the best."  -S.S.