The Charles Schwab Corporation is an American multinational

financial services company Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial inst ...

. It offers

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becau ...

ing,

commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...

ing, investing and related services including consulting, and

wealth management Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high ...

advisory services to both retail and institutional clients. It has over 360

branch A branch, sometimes called a ramus in botany, is a woody structural member connected to the central trunk of a tree (or sometimes a shrub). Large branches are known as boughs and small branches are known as twigs. The term '' twig'' usually ...

es, primarily in financial centers in the United States and the United Kingdom. It is the 7th largest banking institution in the United States with over US$8.5 trillion in client assets. It had 29.0 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.5 million banking accounts, and $8.5 trillion in client assets as of February 7, 2022. It was founded in

San Francisco, California San Francisco (; Spanish for "Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...

, and is headquartered in

Westlake, Texas : Westlake is a town in Denton and Tarrant counties in the U.S. state of Texas and a suburb of Dallas/Ft Worth. The population is 1,623 as of the 2020 United States census. History The area known as Westlake was originally settled in 1847 by ...

. Founded as Charles Schwab & Co. in 1971 by its namesake

Charles R. Schwab Charles Robert Schwab Sr. (born July 29, 1937) is an American investor and financial executive. He is the founder and chairman of the Charles Schwab Corporation. He pioneered discount sales of equity securities starting in 1975. His company be ...

, the company capitalized on the financial deregulation of the 1970s to pioneer discount sales of equity securities. After a flagship opening in

Sacramento ) , image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg , mapsize = 250x200px , map_caption = Location within Sacramento ...

, the bank expanded into

Seattle Seattle ( ) is a port, seaport city on the West Coast of the United States. It is the county seat, seat of King County, Washington, King County, Washington (state), Washington. With a 2020 population of 737,015, it is the largest city in bo ...

before the 1980s economic expansion financed the bank's investments in technology, automation, and digital record keeping. The first to offer round-clock order entry and quotation, it was purchased by

Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...

in 1983 for $55 million. Three years later, the profitability of the bank's no-charge

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV ...

s prompted the founder to buy his company back for $280 million.

History

In 1963,

and two other partners launched ''Investment Indicator'', an investment newsletter. At its height, the newsletter had 3,000 subscribers, each paying $84 a year to subscribe. In April 1971, the firm was incorporated in California as First Commander Corporation, a wholly owned subsidiary of Commander Industries, Inc., for traditional brokerage services and to publish the Schwab investment newsletter. In November of that year, Schwab and four others purchased all the stock from Commander Industries, Inc., and in 1972, Schwab bought all the stock from what was once Commander Industries. In 1973, the company name changed to Charles Schwab & Co., Inc. In 1975, the

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

allowed for negotiated commission rates and Schwab set up a stock brokerage. In September 1975, Schwab opened its first branch in Sacramento, CA, and started offering discount brokerage services. In 1977, Schwab began offering seminars to clients, and by 1978, Schwab had 45,000 client accounts total, doubling to 84,000 in 1979. In 1979, Schwab risked $500,000 on a back-office settlement system called BETA (which was short for Brokerage Execution and Transaction Analysis), enabling Schwab to become the first discount broker to bring automation in house. In 1980, Schwab established the industry's first 24-hour quotation service, and the total of client accounts grew to 147,000. In 1981, Schwab became a member of the

NYSE The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed co ...

, and the total of client accounts grew to 222,000. In 1982, Schwab became the first to offer 24/7 order entry and quote service, its first international office was opened in Hong Kong, and the number of client accounts totaled 374,000. In 1983, Stephen McLin purchased the company for

for $55 million. In 1984, the company launched 140 no-load

s. In 1987, management, including Charles R. Schwab, bought the company from Bank of America for $280 million. In 1991, the company acquired Mayer & Schweitzer, a market making firm, allowing Schwab to execute its customers' orders without sending them to an exchange. In 1997, it was fined $200,000 for failing to arrange the best trades for its customers. The unit was renamed Schwab Capital Markets in 2000. In 1993, the company opened an office in

London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...

. In 1995, the company acquired The Hampton Company, founded by Walter W. Bettinger, who became CEO of Schwab in 2008. In 1996, Web trading goes live. Customers can trade listed and OTC stocks, or check balances and the status of orders on the schwab.com website. In 1998, dissatisfied by the in-house results, the company hired interactive firm Razorfish to redesign the website. Years later the website would be entered in the Cooper-Hewitt Museum's inaugural National Design Triennial. In 2000, Schwab purchased

U.S. Trust Bank of America Private Bank (formerly U.S. Trust) was founded in 1853 as the United States Trust Company of New York. It operated independently until 2000, when it was acquired by Charles Schwab Corporation, Charles Schwab, and Co. and subsequ ...

for $2.73 billion. In 2001, less than a year after the acquisition of U.S. Trust, the U.S. Trust subsidiary was fined $10 million in a bank secrecy law case. It was ordered to pay $5 million to the New York State Banking Department and $5 million to the Federal Reserve Board. On November 20, 2006, Schwab announced an agreement to sell U.S. Trust to

for $3.3 billion in cash. The deal closed in the second quarter of 2007. In January 2004, Schwab acquired

SoundView Technology Group Soundview Technology Group is an American technology-focused firm known primarily for its equity research on technology and other growth-oriented companies. The securities and investment banking company was integrated into Charles Schwab in 2003 ...

for $345 million to add

equity research Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts", "research analysts", or "securities analysts"; all the foregoing terms are synonymous. Researc ...

capabilities. David S. Pottruck, who had spent the majority of his 20 years at the brokerage as Charles R. Schwab's right-hand man, shared the CEO title with the company's founder from 1998 to 2003. In May 2003, Mr. Schwab stepped down, and gave Pottruck sole control as CEO. On July 24, 2004, the company's board fired Pottruck, replacing him with its founder and namesake. News of Pottruck's removal came as the firm had announced that overall profit had dropped 10%, to $113 million, for the second quarter, driven largely by a 26% decline in revenue from customer stock trading. After coming back into control, Mr. Schwab conceded that the company had "lost touch with our heritage", and quickly refocused the business on providing financial advice to individual investors. He also rolled back Pottruck's fee hikes. The company rebounded, and earnings began to turn around in 2005, as did the stock. The share price was up as high as 151% since Pottruck's removal, ten times since the return of Charles Schwab. The company's net transfer assets, or assets that come from other firms, quadrupled from 2004 to 2008. Schwab's YieldPlus fund drew controversy during the

2007 financial crisis 7 (seven) is the natural number following 6 and preceding 8. It is the only prime number preceding a cube. As an early prime number in the series of positive integers, the number seven has greatly symbolic associations in religion, mythology, s ...

because of its -31.7% return. Investors in the Schwab YieldPlus Fund, including Charles Schwab himself, lost $1.1 billion. Schwab closed the YieldPlus funds in 2011. In April 2007, the company acquired The 401(k) Company. On July 22, 2008, Walter W. Bettinger, the previous

chief operating officer A chief operating officer or chief operations officer, also called a COO, is one of the highest-ranking executive positions in an organization, composing part of the " C-suite". The COO is usually the second-in-command at the firm, especially if t ...

, was named chief executive, succeeding the company's namesake. Charles R. Schwab remained

executive chairman The chairperson, also chairman, chairwoman or chair, is the presiding officer of an organized group such as a board, committee, or deliberative assembly. The person holding the office, who is typically elected or appointed by members of the group ...

of the company and said in a statement that he would "continue to serve as a very active chairman". In 2011, the company acquired OptionsXpress. The company also acquired Compliance11, Inc., a provider of compliance software. In 2012, it acquired ThomasPartners, an

asset management Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...

firm. On July 1, 2020, the company acquired Wasmer, Schroeder & Company, an independent investment manager of fixed income in separately managed accounts with $10.7 billion in assets under management. On May 26, 2020, the company acquired

USAA The United Services Automobile Association (USAA) is a San Antonio-based Fortune 500 diversified financial services group of companies including a Texas Department of Insurance-regulated reciprocal inter-insurance exchange and subsidiaries offer ...

's investment management accounts for $1.8 billion in cash. In June 2020, the company began allowing investors to purchase fractional shares. On October 6, 2020, the company completed the acquisition of

TD Ameritrade TD Ameritrade is a stockbroker that offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, forex, options, mutual funds, fixed income invest ...

. Effective on January 1, 2021, the company moved its headquarters from San Francisco, California to

Marketing

In 2004, Charles Schwab chose

Havas Worldwide Havas Creative, formerly known as Havas Worldwide and Euro RSCG, is a French advertising agency. It is one of the largest integrated marketing communications agencies in the world, made up of 316 offices located in 75 countries. The firm provid ...

(then called Euro RSCG) as its full-service

advertising agency An advertising agency, often referred to as a creative agency or an ad agency, is a business dedicated to creating, planning, and handling advertising and sometimes other forms of promotion and marketing for its clients. An ad agency is generall ...

. The company launched a series of television ads featuring the slogan ''Talk to Chuck'' by Euro RSCG and directed/animated by

Bob Sabiston Bob Sabiston (born 1967) is an American film art director, computer programmer, and creator of the Rotoshop software program for computer animation. Sabiston began developing software as an undergraduate and then graduate researcher in the MIT M ...

's Flat Black Films in 2005. "Talk to Chuck" campaign appeared in print media, online, billboards, and branch offices. A blog post in ''

The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...

'' described the ads as effective because they included a single memorable phrase. In February 2013, Schwab hired

Crispin Porter + Bogusky Saints Crispin and Crispinian are the Christian patron saints of cobblers, curriers, tanners, and leather workers. They were beheaded during the reign of Diocletian; the date of their execution is given as 25 October 285 or 286. History Born ...

(CP+B) as its lead creative agency with Havas Worldwide remaining to create ads for ActiveTrader and optionsXpress. The company launched an advertising campaign by CP+B with the slogan ''Own Your Tomorrow'' that same year. In March 2015,

Adweek ''Adweek'' is a weekly American advertising trade publication that was first published in 1979. ''Adweek'' covers creativity, client–agency relationships, global advertising, accounts in review, and new campaigns. During this time, it has cove ...

reported on marketing material created by CP+B for Schwab's Intelligent Portfolio service.

Schwab Charitable Fund

The Schwab Charitable Fund is a

donor advised fund In the United States, a donor-advised fund (commonly called a DAF) is a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organizations, families, or individuals. To participate in a don ...

which allows clients the option to preserve the anonymity of their donations. Professionally managed accounts are only available through independent investment advisors working with Schwab Advisor Services, a business segment of The Charles Schwab Corporation. It accepts contributions of real estate, private equity or other non-cash assets via a charitable intermediary, with proceeds of the donation transferred to a donor-advised account upon liquidation. This intermediary considers donations on a case-by-case basis, with a typical requirement that assets be valued at $250,000 or more.

SEC charges

In June 2022, the U.S. Security and Exchange Commission ordered Charles Schwab Corp to pay $187 million to settle its charges for failing to disclose fund allocations and misleading its

robo-advisor Robo-advisors or robo-advisers are a class of financial adviser that provide financial advice and investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algori ...

clients. It was determined that between March 2015 to November 2018, Charles Schwab misled customers and prospective investors by allowing them to believe that its robo-advisor service had no hidden fees, and it did not inform the clients about the cash drag on their investments. The SEC stated that the company has made money from cash allocations in the robo-advisor portfolios by sweeping cash to its affiliated bank, loaning it out, and keeping the difference between the interest it earned on the loans and what it paid in interest on the robo-advisor clients.

References

External links

* {{authority control, state=expanded Companies based in the Dallas–Fort Worth metroplex Financial services companies established in 1971 Companies listed on the New York Stock Exchange Investment management companies of the United States Exchange-traded funds Online brokerages American companies established in 1971 1971 establishments in California Electronic trading platforms