Charles Schwab Paying $186 Million in Regulatory Settlement Over Robo-Adviser Business

WASHINGTON Charles Schwab & Co. Inc. will pay more than $186 million to settle a regulatory investigation that found it didnt adequately disclose how keeping a big share of clients assets in cash could hurt investment returns.

The Securities and Exchange Commission said Schwabs robo-adviser portfolios kept between 6% and 29.4% of assets in cash, instead of investing the money in stocks or other securities. The practice made money for Schwabs affiliated bank, which lent out the cash, and the investment adviser made false and misleading statements in regulatory brochures about the conflict of interest, the SEC said in a settlement order.