In Keith Girard’s article on RIABiz, “What to make of a $239M-AUM RIA dwindling to $191M then suing Schwab for $100M as the alleged cause of the asset hemorrhage,” RIA custodian Schwab fired RIA Ed Butowsky based on a contract allowing undisputed firing and Butowsky’s firm got caught in the cross-fire of politics and alleged “fake news.”
Ed Butosky became embroiled in a financial and political scandal based on Rod Wheeler’s lawsuit against Fox News and Chapwood Investment Management and subsequent press stories by National Public Radio, including the radio report “Behind Fox News’ Baseless Seth Rich Story: The Untold Tale” and “The Man Behind the Scenes in Fox News’ Discredited Seth Rich Story.” It’s not so simple a question as to whether Butowsky was let go for political motivations or for normal business purposes.
“It wouldn’t be shocking to me if the controversy made them look more closely at what [Butowsky] was doing,” said Corey Kupfer, a New York lawyer who works with breakaway advisors. “All the custodians make decisions on who they are comfortable having on their platforms based on their own needs. They don’t have to accept anyone.”
“I think the interesting question here is whether this is a somewhat of a routine decision that’s just heightened by the fact that we’re in these political times, or whether that even played a big role,” Kupfer adds. “My guess is maybe that was a trigger for them to look, probably heightened by the times, but it could also be just a business decision that Schwab made.”
Read the entirety of the article here.