Charles Schwab Investment Management reported 914,834 shares in Cummins Inc. as of 31 March 2026, a position valued at $492,198,989 in its latest 13F filing. Almost all of them, 914,685 shares, appeared under sole voting authority.
That is not pocket change. It is a sizeable managed position carrying almost a million pieces of shareholder power. And like so many others, it is another institutional manager willing to sit inside the dirty ecosystem that TCAP exists to expose.
The Robo-Advisor That Was Not Free
In June 2022, the Securities and Exchange Commission hammered three Schwab investment-adviser subsidiaries for misleading clients about Schwab Intelligent Portfolios, their so-called no-fee robo-advisor.
Charles Schwab Investment Management was not one of the three subsidiaries charged in that particular case. It remains part of the wider Schwab record.
From 2015 to 2018, Schwab told customers that the cash allocation in these portfolios was the product of a “disciplined” methodology designed for optimal returns. What it failed to mention was that the unusually high cash drag existed largely so Schwab could earn interest by sweeping that cash to an affiliated bank and lending it out. Clients took the performance hit. Schwab took the revenue.
The settlement: $187 million. Roughly $52 million in disgorgement and interest, plus a $135 million civil penalty. The subsidiaries also had to hire an independent consultant.
A “no-fee” product that quietly charged clients through the back door via underperformance.
Classic.
YieldPlus: The Cash Alternative That Blew Up
Then there is the YieldPlus fund. Marketed in the mid-2000s as a safe, ultra-short-term bond fund, essentially a cash alternative for cautious investors.
It was loaded with mortgage-related securities. When the financial crisis hit, the SEC said the fund’s net asset value fell 28 percent during an eight-month period. Assets collapsed from $13.5 billion to $1.8 billion through falling values and investor withdrawals.
Investors who thought they had parked money somewhere safe watched it get shredded.
In 2011, the SEC charged Charles Schwab Investment Management itself, along with Charles Schwab & Co. and Schwab Investments, with making misleading statements about the fund’s risks and holdings. The settlement exceeded $118 million.
A separate securities class action concerning YieldPlus produced a $235 million settlement.
Charles Schwab Investment Management was named directly. Not some distant affiliate. The asset-management arm itself.
The Cash Sweep Grift That Will Not Die
Fast forward to 2024–2026 and the lawsuits keep coming over Schwab’s cash-sweep programmes.
Multiple proposed class actions allege that Schwab entities pay clients unreasonably low interest rates on uninvested cash automatically swept into affiliated bank accounts, while Schwab pockets a much larger spread.
One complaint alleges that the cash-sweep arrangements helped support the financing of Schwab’s TD Ameritrade acquisition. Another proposed case includes allegations of elder financial abuse.
These cases remain ongoing. Nothing has been finally adjudicated, and the allegations have not been established as fact.
Still, the pattern alleged is familiar: take the client’s idle money, pay them next to nothing and keep the difference.
A Pattern, Not a Series of Isolated Fuck-Ups
Look at the record and a picture forms. High cash drag hidden inside a “free” product. A bond fund sold as safe that was anything but. Cash sweeps that allegedly prioritise the house over the client.
The cases do not all concern the same Schwab entity. That distinction matters.
Corporate groups love presenting themselves as one trusted family when selling products and a collection of distant cousins when regulators arrive.
The robo-advisor settlement is from 2022. The cash-sweep litigation is live. The YieldPlus scars remain clearly visible in the regulatory memory.
Charles Schwab Investment Management is not some boutique outfit operating in the shadows. Its latest 13F reported more than $654 billion in securities.
When a financial group of that size repeatedly finds itself explaining to regulators and judges why clients were allegedly left holding the bag, the explanations start to wear thin.
Just Another Name on the Register
And yet here they are, reporting almost half a billion dollars in Cummins stock and sole voting authority over virtually the entire position.
The shares may sit inside index funds, managed accounts and other client portfolios. That does not make the position meaningless.
An index can explain why the shares entered the portfolio. It cannot explain how Schwab used the power attached to them.
How did Schwab-managed funds vote on Cummins directors, executive pay and governance proposals? What engagement took place over Cummins’ environmental, regulatory and workforce risks? At what point does an institutional manager use its shareholder authority rather than quietly collect the returns?
No special insight required. No conspiracy theory needed.
Just the ordinary, grinding reality of capital going where the returns are, regardless of the company it keeps.
Passive investing is not a vow of silence. If almost a million votes sit in your hands, you are already at the table.
TCAP will keep naming the names. The list is long.
Charles Schwab Investment Management has now earned its place on it.
Lee Thompson – Founder, The Cummins Accountability Project
Sources
- Charles Schwab Investment Management Q1 2026 Form 13F – SEC
- Schwab Subsidiaries Misled Robo-Adviser Clients about Absence of Hidden Fees – SEC
- SEC Charges Schwab Entities and Two Executives With Making Misleading Statements – SEC
- Schwab YieldPlus Fair Fund – SEC
- Schwab YieldPlus Funds $235 Million Class-Action Settlement – Hagens Berman
- Cash-Sweep Litigation Centralisation Order – US Judicial Panel on Multidistrict Litigation
- Charles Schwab Cash-Sweep Class-Action Allegations – Top Class Actions
- Charles Schwab Investment Management Proxy-Voting Policy