Industry News

Ed Butowsky plans to serve Schwab with $100 million lawsuit Monday

Adviser claims he was kicked off the custodian platform for political bias.

Now that financial adviser Ed Butowsky has put two major defamation lawsuits behind him, he is refocusing his efforts on suing Charles Schwab Corp. for kicking his advisory practice off its custodian platform in January.

Mr. Butowsky, managing director of Chapwood Capital Investment Management in Plano, Texas, has refiled a lawsuit against Schwab that is expected to be served on Monday, according to Mr. Butowsky’s lawyer, Steven Biss.

The lawsuit was originally filed in April but expired in July without being served. It charges Schwab with political bias and seeks $100 million.

The lawsuit was refiled last Friday, the day after a U.S. District Court judge dismissed the two defamation lawsuits, which were related to Fox News’ coverage of the murder of former Democratic National Committee staffer Seth Rich and included Mr. Butowsky among the defendants.

In the wake of the dismissed defamation suits, Mr. Butowsky, who used the Schwab platform to custody his clients’ assets for more than a dozen years prior to the dismissal, made it clear he is now ready to defend his reputation and get back the clients and business income that he lost while he was fighting the lawsuits.

“Anybody who did anything negative to me, they’re going to pay for this,” he said.

According to the lawsuit, Schwab’s “intentional wrongdoing” caused Chapwood’s assets under management to fall by $45 million, to less than $200 million. The suit also claims that Chapwood lost “over 268 customer accounts and suffered substantial loss of income.”

Mayura Hooper, Schwab’s vice president of corporate reputation, declined to comment on the lawsuit, but emailed the following statement: “Schwab has terminated its relationship with Chapwood Capital Investment under the terms of our contractual agreement, effective January 22, 2018. The termination was a business decision following a thorough business review of Chapwood. We do not publicly discuss the details of our business reviews.”

Mr. Butowsky’s charge of political bias on the part of Schwab reflects Chapwood’s history of performing “all duties and responsibilities called for” under the terms of the agreement with the custodian, according to the suit.

What changed, according to the lawsuit, were a couple of news stories in August 2017 that negatively portrayed Mr. Butowsky’s involvement in the 2016 Fox News story on Mr. Rich’s murder.

The lawsuit claims that “Schwab and its senior management did absolutely no due diligence and made no effort to determine whether” the statements about Mr. Butowsky were true, and “blindly accepted” the “misrepresentations about Mr. Butowsky.”