WASHINGTON—Charles Schwab & Company Inc. will pay more than $186 million to settle a regulatory investigation that found it did not adequately disclose how investment returns from holding a substantial portion of clients’ assets in cash may cause damage.
The Securities and Exchange Commission said Schwab’s robo-advisory portfolio held 6% and 29.4% of assets in cash rather than investing money in stocks or other securities. The SEC said in a settlement order that the practice made money for Schwab’s affiliated bank, which lent cash, and the investment advisor made “false and misleading statements” about conflicts of interest in regulatory brochures.