If you suffered investment losses at Charles Schwab due to broker misconduct, unsuitable recommendations, or unauthorized trading, you may be entitled to recover your losses through FINRA arbitration. Despite being one of America’s largest brokerage firms, Charles Schwab has accumulated 312 disclosures on its FINRA BrokerCheck record and has paid hundreds of millions in regulatory fines and investor settlements.
At Varnavides Law, we help investors pursue Charles Schwab claims and fight to recover losses caused by broker negligence, fraud, and violations of securities laws. Attorney Gary Varnavides spent 10 years defending broker-dealers at a major securities law firm, which means he knows exactly how firms like Schwab build their defenses and how to counter them effectively.
Key Takeaways
- 312 disclosures on Charles Schwab’s FINRA BrokerCheck record
- $187 million SEC settlement in 2022 for robo-advisor misconduct
- $350 million+ in combined settlements for the YieldPlus Fund fraud
- 6-year deadline to file FINRA arbitration claims against Schwab
- Contingency fee basis means no upfront costs to pursue your claim
Charles Schwab’s Regulatory History and Investor Complaints
Charles Schwab & Co., Inc. (CRD #5393) has been the subject of numerous regulatory actions, investor complaints, and FINRA arbitration awards. While Schwab advertises itself as a trusted name in investing, the firm’s track record reveals a pattern of regulatory violations and investor harm.
| Year | Regulatory Action | Amount | Issue |
|---|---|---|---|
| 2022 | SEC Settlement | $187 million | Robo-advisor cash allocation fraud |
| 2023 | FINRA Fine | $350,000 | ETN disclosure violations |
| 2016 | Texas Fine | $130,000 | Power of attorney supervision failures |
| 2011 | FINRA Fine | $500,000 | Class action waiver violations |
| 2011 | SEC/Class Action | $350+ million | YieldPlus Fund misrepresentation |
According to FINRA BrokerCheck, Charles Schwab currently has 312 disclosures on its record. These disclosures include regulatory actions, customer complaints, and arbitration awards. This extensive disclosure history suggests ongoing supervisory and compliance issues that may have caused investor losses.
Types of Charles Schwab Claims We Handle
Investors who lost money at Charles Schwab may have claims based on various forms of investment fraud and broker misconduct. Understanding the type of misconduct you experienced is the first step toward recovering your losses.
Trading Misconduct
- Unauthorized Trading – Executing trades without your permission or outside your instructions
- Churning – Excessive trading to generate commissions at your expense
- Unsuitable Recommendations – Investments that do not match your risk tolerance, objectives, or financial situation
Fiduciary Violations
- Breach of Fiduciary Duty – Failing to act in your best interests
- Failure to Supervise – Inadequate oversight of broker activities under FINRA Rule 3110
- Conflicts of Interest – Undisclosed compensation arrangements that influenced recommendations
Fraud and Misrepresentation
- Material Misrepresentation – False statements about investment risks or potential returns
- Omission of Material Facts – Failing to disclose important information
- Securities Fraud – Intentional deception in connection with securities transactions
Product-Specific Claims
- Robo-Advisor Claims – Schwab Intelligent Portfolios cash allocation issues
- Structured Products – Complex investment products sold to unsuitable investors
- ETN/ETF Claims – Exchange-traded products with undisclosed risks
Major Charles Schwab Cases and Settlements
Understanding past Charles Schwab cases can help you evaluate whether you may have a viable claim. These cases demonstrate the types of misconduct that have led to significant investor recoveries.
SEC Robo-Advisor Settlement (2022)
In June 2022, the SEC charged three Charles Schwab investment adviser subsidiaries with misleading robo-advisor clients about the allocation of cash in their accounts. The SEC found that from March 2015 through November 2018, Schwab claimed its Intelligent Portfolios used a “disciplined portfolio construction methodology” to determine cash allocations. In reality, these cash amounts were pre-set to generate revenue for Schwab’s affiliated bank.
Settlement Details: Schwab agreed to pay approximately $52 million in disgorgement and prejudgment interest, plus a $135 million civil penalty, for a total of $187 million. This settlement demonstrates that even automated investment platforms can be subject to fraud claims when investors are misled about how their money is managed.
YieldPlus Fund Litigation (2008-2011)
The Schwab YieldPlus Fund case remains one of the largest mutual fund fraud cases in history. According to SEC Litigation Release No. 21806, between 2005 and mid-2008, Schwab made misleading statements about the fund, marketing it as a safe “cash alternative” when it was actually heavily invested in risky mortgage-backed securities. When the housing market collapsed, investors lost billions.
The combined settlements exceeded $350 million:
- SEC settlement: $119 million in disgorgement, interest, and penalties
- Class action settlement: $235 million to affected investors
Recent FINRA Arbitration Awards (2024-2025)
Recent FINRA arbitration cases show that investors continue to win significant awards against Charles Schwab:
- Cherry-Picking Fraud Case (May 2025): A FINRA panel awarded investors nearly $350,000, including punitive damages, after finding Schwab liable for a cherry-picking scheme run by a third-party advisor. This was the first known case holding a major brokerage liable for RIA fraud on its platform.
- Vora Wealth Management Cases (2024): Investors recovered $167,950 and $165,440 in separate arbitrations involving complex structured products sold through an RIA that used Schwab as custodian.
- Investment Recommendations Case: A customer was awarded $144,000 after a FINRA panel found Schwab liable for flawed investment recommendations and unsuitable concentrations of risk.
How to File a Charles Schwab Claim Through FINRA Arbitration
Most Charles Schwab claims must be resolved through FINRA arbitration rather than court litigation. This is because Schwab’s customer agreements contain mandatory arbitration clauses. While this may seem like a disadvantage, experienced securities attorneys often find arbitration to be an efficient and effective forum for recovering investor losses. For more information about filing claims, visit the official FINRA Arbitration Filing page.
Important Deadline: You have 6 years from the date of the wrongful conduct to file a FINRA arbitration claim. Under FINRA Rule 12206, this is an absolute deadline that cannot be extended. If you believe you have a claim against Charles Schwab, contact a securities attorney immediately to evaluate your options before time runs out.
The FINRA Arbitration Process
| Stage | Description | Timeline |
|---|---|---|
| Filing | Submit Statement of Claim, Submission Agreement, and filing fee | Day 1 |
| Response | Schwab files answer to your claims | Within 45 days |
| Arbitrator Selection | Both parties rank and select arbitrators | 20-25 days after answer |
| Discovery | Exchange of documents and evidence | 3-6 months |
| Hearing | Present evidence and testimony to arbitration panel | 1-3 days |
| Award | Arbitrators issue binding decision | 30 days after hearing |
The entire FINRA arbitration process typically takes 12-16 months from filing to decision, according to FINRA’s official arbitration timeline. Cases that settle before hearing may resolve in approximately 12 months. All arbitration awards are legally binding, and Schwab must pay within 30 days or face FINRA suspension.
What Damages Can You Recover in a Charles Schwab Claim?
If your Charles Schwab claim is successful, you may be entitled to recover various types of damages depending on the nature and extent of the misconduct:
Compensatory Damages
Recovery of actual investment losses directly caused by the misconduct. This includes the difference between what you invested and what your account is worth, plus any opportunity costs.
Interest
Pre-judgment and post-judgment interest on your losses from the date of the misconduct to the date of the award. Interest can significantly increase your total recovery.
Punitive Damages
In cases involving fraud or egregious misconduct, arbitrators may award punitive damages to punish the wrongdoer. The 2025 cherry-picking case showed Schwab can be held liable for punitive damages.
Additional recoverable damages may include attorney fees, expert witness fees, FINRA filing fees, and other costs associated with pursuing your claim.
Why Gary Varnavides Is the Right Attorney for Your Schwab Claim
When you file a claim against a major brokerage firm like Charles Schwab, you need an attorney who understands how these firms defend themselves. Gary Varnavides brings a unique perspective to investor claims because he spent 10 years on the other side.
Insider Knowledge
At Sichenzia Ross Ference LLP, Gary defended broker-dealers against investor claims for a decade. He knows the defense strategies, the documentation they rely on, and the weaknesses in their arguments. This insider knowledge translates directly into stronger claims for our clients.
Proven Recognition
Gary has been named a Super Lawyers Rising Star from 2015-2023, placing him among the top 2.5% of attorneys in the New York Metro area. He is licensed to practice in California, New York, and New Jersey, allowing him to represent investors nationwide in FINRA arbitration.
Common Defenses Schwab Uses and How We Counter Them
Charles Schwab and other major brokerage firms typically raise predictable defenses in arbitration. Our experience allows us to anticipate and effectively counter these arguments:
- “You approved the trades” – We examine whether you truly understood what you were authorizing and whether Schwab fulfilled its disclosure obligations
- “Market conditions caused the losses” – We demonstrate that the losses resulted from misconduct, not normal market fluctuations
- “You’re a sophisticated investor” – We show that sophistication does not excuse fraud, misrepresentation, or unsuitable recommendations
- “The statute of limitations has passed” – We carefully analyze when you knew or should have known about the misconduct to ensure your claim is timely
Charles Schwab’s Conflicts of Interest
Understanding Schwab’s conflicts of interest can help support your claim. According to Schwab’s own Customer Relationship Summary, the firm has multiple fee-based conflicts that may have influenced recommendations made to you:
Disclosed Conflicts: Schwab receives shareholder service fees from third-party fund providers, management fees from affiliated mutual funds and ETFs, promotional fees from asset managers, spread revenue from cash accounts, dealer concession fees, insurance commissions on annuities, and order routing revenue. Any of these could have incentivized recommendations that were not in your best interest.
Fee Structure for Charles Schwab Claims
We handle most Charles Schwab claims on a contingency fee basis, which means:
- No upfront attorney fees – You pay nothing unless we recover money for you
- Fee percentage discussed during consultation – We will explain our fee arrangement clearly before you decide to proceed
- Case costs – You remain responsible for case costs, including FINRA filing fees, expert witnesses, and deposition transcripts, though we can discuss payment arrangements during your consultation
Schedule a free consultation to discuss your Charles Schwab claim and learn whether you may be entitled to recover your investment losses.
Frequently Asked Questions About Charles Schwab Claims
How long do I have to file a claim against Charles Schwab?
You have 6 years from the date of the misconduct to file a FINRA arbitration claim against Charles Schwab. This is known as the eligibility rule under FINRA Rule 12206 and is an absolute deadline that cannot be extended. If your losses occurred more than 6 years ago, you may still have options depending on when you discovered the misconduct, so contact an attorney to discuss your situation.
Can I sue Charles Schwab in court?
In most cases, no. Charles Schwab’s customer account agreements contain mandatory arbitration clauses that require disputes to be resolved through FINRA arbitration rather than court litigation. However, FINRA arbitration can be an efficient and effective forum for recovering investment losses, and experienced securities attorneys often achieve favorable results for their clients in this forum.
What evidence do I need to file a Charles Schwab claim?
Helpful evidence includes account statements, trade confirmations, correspondence with your broker or Schwab representatives, the account agreement you signed, and any marketing materials you received. Your attorney can help you gather additional evidence through the FINRA discovery process, including internal Schwab documents that may support your claim.
How much does it cost to pursue a claim against Charles Schwab?
Most securities attorneys, including Varnavides Law, handle Charles Schwab claims on a contingency fee basis. This means you pay no upfront attorney fees and only pay if your claim is successful. You remain responsible for case costs such as FINRA filing fees, which vary based on the size of your claim, but these can often be discussed and arranged during your initial consultation.
What types of losses can I recover in a Charles Schwab arbitration?
You may be entitled to recover compensatory damages (your actual investment losses), pre-judgment and post-judgment interest, and in cases involving fraud or egregious misconduct, punitive damages. You may also recover attorney fees, expert witness costs, and FINRA filing fees depending on the outcome of your case.
How long does FINRA arbitration against Charles Schwab take?
FINRA arbitration typically takes 12-16 months from filing to decision. Cases that settle before hearing may resolve in approximately 12 months. Complex cases or those involving significant discovery may take longer. The timeline includes filing, response, arbitrator selection, discovery, hearing, and award phases.
Does Charles Schwab have a history of regulatory violations?
Yes. Charles Schwab has 312 disclosures on its FINRA BrokerCheck record, including multiple SEC settlements, FINRA fines, and state regulatory actions. Notable cases include the $187 million SEC settlement in 2022 for robo-advisor misconduct and the $350+ million in combined settlements related to the YieldPlus Fund fraud. This history may support your claim by demonstrating a pattern of compliance failures.
Can I file a claim if my losses were in a Schwab robo-advisor account?
Yes. The SEC’s 2022 settlement with Schwab established that robo-advisor clients were misled about cash allocations in Schwab Intelligent Portfolios. If you had money in a Schwab robo-advisor account and experienced losses due to excessive cash holdings or other issues, you may have a valid claim. Contact an attorney to evaluate your specific situation.
Take Action on Your Charles Schwab Claim Today
If you suffered investment losses at Charles Schwab due to broker misconduct, unsuitable recommendations, fraud, or negligence, you may be entitled to recover those losses through FINRA arbitration. With over $500 million in regulatory fines and settlements, Charles Schwab has a documented history of compliance failures that have harmed investors.
At Varnavides Law, attorney Gary Varnavides brings 10 years of experience defending broker-dealers to your case, giving you the insider advantage you need to take on a major financial institution. We handle most cases on a contingency fee basis, so you pay nothing unless we recover money for you.
Free Consultation for Charles Schwab Claims
Contact Varnavides Law today for a free, confidential evaluation of your Charles Schwab claim. We will review your situation, explain your legal options, and help you understand whether you may be entitled to recover your investment losses.
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