The SEC is continuing to tighten the screws on the robo advisors.
The regulator announced Thursday that SoFi Wealth, the digital advice arm of fintech firm SoFi, will pay $300,000 to settle allegations that it transferred clients to proprietary ETFs without properly informing them or accounting for tax consequences. Oh yes, right, of course, SoFi neither admitted or denied any of the findings. You’re welcome, lawyers.
The penalty comes just a couple months after SoFi took the SPAC route — which is also facing more SEC scrutiny — to go public, but it’s just the latest robo advisor to find itself in hot water. Charles Schwab revealed in July that it set aside $200 million for an SEC inquiry into its robo, Schwab Advisor Services. Though details of the investigation are still under wraps, some suspect that it could be due to disclosures regarding its own use of proprietary ETFs or marketing claims about the product being “free.”
And in 2018, the SEC went after both Wealthfront and the now-defunct Hedgeable over false statements about investment products and misleading advertising.
SoFi wasn’t the first robo advisor to face the SEC, and it won’t be the last. “Move fast and break things” may be a popular slogan in Silicon Valley, but perhaps they should slow down and take a little more caution when managing other people’s money. |  | Ryan Neal
Technology Editor, Financial Planning
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