FINRA panel orders Schwab to pay $1.34 million over crypto scam

A FINRA arbitration panel ordered Charles Schwab to pay about $1.34 million after an 82-year-old client’s funds reached crypto exchange Okcoin. The award, issued September 10, followed a dispute involving three wire transfers from the client’s trust account.

The Morthland family trust alleged that Schwab failed to safeguard the assets and respond to signs of senior financial exploitation. The transfers totaled nearly $1.7 million over three days. Investigators recovered about $350,000, reducing the damages sought by the family. Two arbitrators supported the award, while one dissented. The panel also denied the family’s request for legal fees.

Schwab said it sympathized with the client’s family but disagreed with the decision. The company said the ruling disregarded basic legal principles and emphasized fraud prevention and customer vigilance. The case highlights growing scrutiny of brokerage controls when customers move large sums to cryptocurrency platforms.