The firm blamed the shortfall on fee cuts and the cost of a national advertising campaign, which it said would reduce earnings by $40 million before taxes, and severance charges, which it said would reduce earnings by another $10 million. In September, Schwab announced it would eliminate account service fees and order handling charges, its seventh price cut since May 2004.
Meanwhile, Schwab was fined $1 million by the
"This case is a stern reminder that firms must have adequate procedures to supervise and control transfers of assets from customer accounts," said Susan Merrill, the Big Board's enforcement chief. "It goes to the heart of customers' expectations that their money is safe."