FINRA charges Charles Schwab for violating customer agreement rules
The Financial Industry Regulatory Authority (FINRA) has charged Charles Schwab & Company for violating FINRA rules by requiring its customers to waive their rights to bring class actions against the firm.
In October 2011, Schwab included a provision to its customer account agreement, which was sent to nearly 7 million customers, requiring customers to waive their rights to bring or participate in class actions against the firm.
The amendments also included its customers to agree that arbitrators in arbitration proceedings would not have the authority to consolidate more than one party's claims.
According to FINRA, both provisions violated its rules with respect to language or conditions placed by firms in customer agreements. It further alleged that Schwab's conduct was ongoing because, since October 2011 the firm used the amended account agreements in opening more than 50,000 new customer accounts.
FINRA has sought an expedited hearing against the firm.
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