A Financial Industry Regulatory Authority arbitration panel has ordered Charles Schwab to pay nearly $1.34 million after an elderly client’s funds were transferred to cryptocurrency exchange Okcoin during a reported scam.
The award, issued in September 2026, followed a dispute brought by the Morthland family trust. The claimants alleged that Schwab failed to protect the client’s assets and did not respond adequately to signs of possible senior financial exploitation.
Three wire transfers sent nearly $1.7 million from the client’s Schwab trust account to Okcoin over three days. The client was 82 at the time. Investigators later recovered about $350,000, reducing the amount sought by the family.
The case highlights risks surrounding crypto-related wire transfers, particularly when scammers target older investors.
FINRA Arbitration Splits Over Schwab’s Responsibility
The family filed its claims in 2024. It alleged negligence, breach of contract, breach of fiduciary duty, and violations of FINRA rules.
Two arbitrators supported the award, while one dissented. The panel awarded approximately $1.34 million in compensatory damages but did not grant legal fees.
The family’s attorney argued that the transfers contained warning signs that should have prompted additional scrutiny. He said brokerage firms have responsibilities to maintain reasonable supervisory systems that can detect and address suspected senior exploitation.
Schwab disputed the decision and said it disagreed with the panel’s conclusions. The firm also emphasized the importance of clients remaining cautious with financial transactions and protecting personal information.
Crypto Transfers Raise Elder-Fraud Concerns
The dispute comes as financial firms face growing scrutiny over scams that use cryptocurrency transactions to move stolen funds. Crypto exchanges can become part of fraud schemes when criminals persuade victims to send large wire transfers under false pretenses.
The case also illustrates the challenges brokers face when customers authorize transactions that later prove fraudulent. Determining when a firm should intervene remains a significant issue in disputes involving elder financial exploitation and digital assets.
For investors, the episode underscores the importance of independently verifying unexpected payment requests and involving trusted family members or financial professionals when large crypto transfers arise.
