Schwab's CEO Clarifies Its Response to Reddit-Inspired Rally

CEO Walt Bettinger speaks at the firm’s 2018 Impact conference. (Credit: Charles Schwab)

As controversy continued around the actions taken recently by certain brokerage firms amid the Reddit-fueled volatility seen in the trading of GameStop and other stocks, Charles Schwab CEO Walt Bettinger took another stab Tuesday at setting the record straight about the firm’s actions.

“Unlike some other brokerage firms, neither” Schwab nor TD Ameritrade’s trading platforms halted any stock purchases or sales last week, Bettinger stressed during the company’s Winter Business Update webcast.

In addition, neither Schwab or TD “restricted clients from executing any basic options strategies,” he said, adding that he was attempting to dispel claims to the contrary that had been made by certain publications and on social media.

What Schwab and TD Ameritrade did do was “restrict certain advanced options strategies,” Bettinger said Tuesday. He went on to explain the reasons in a bit more detail than the firm did on Friday.

“Some of those advanced options strategies create the risk of loss levels that would be so large that the investor/client may not be able to cover the losses that they incurred from their actions,” the executive said. “Effectively, that leaves the risk of those losses with us.”

Further playing down the significance of the moves Schwab took, he explained: “Actions like this are normal course of business. We take them on a regular basis. And, as you would expect, our owners, our regulators and others expect — and they actually require — that we manage the firm prudently.”

Bettinger continued: “It is imprudent to allow positions that have the potential to leave our brokerage firm with the losses that the investor/client may not be able to cover.”

The CEO didn’t mention any rival brokerage by name.