BrokersXpress, the specialty broker-dealer owned by Schwab under OptionsXpress Holdings, reportedly told advisors and clients Wednesday that it will shut its doors. Schwab purchased the options-based businesses in March 2011 for a reported $1 billion.
"We acquired OptionsXpress to gain access to a retail derivatives product offering," Schwab spokesman Susan Forman told AdvisorOne. "As part of that deal, we also gained BrokersXpress. What we've found is that it was difficult to integrate because BrokersXpress does not meet our core business needs."
As such, Forman said it is winding down BrokersXpress with the requisite 90-day notification process for affiliated advisors and clients. CEO Barry Metzger will remain with OptionsXpress, as will most of the staff of BrokersXpress, she added.
OptionsXpress has been the subject of two separate investigations by the Securities and Exchange Commission recently, in which charges were filed. Forman emphatically stated that the decision to close BrokersXpress has nothing to do with either case.
In the first case, the SEC charged the firm, as well as four officials at the firm and a customer, in an alleged abusive naked short-selling scheme.
The SEC's Division of Enforcement claims the Chicago-based firm "failed to satisfy its close-out obligations under Regulation SHO by repeatedly engaging in a series of sham 'reset' transactions designed to give the illusion that the firm had purchased securities of like kind and quantity."
