A federal court recently certified a class action against Charles Schwab & Company, Inc. brought on behalf of investors in the Schwab YieldPlus Fund. The certification means that the lawsuit can proceed as a class action; no settlement has been reached. Most importantly for YieldPlus investors with significant losses, the deadline to be excluded from this class action is December 28, 2009.
Absent a timely and properly filed request for exclusion, YieldPlus investors who happen to be class members (i.e., who purchased the YieldPlus Fund within certain dates) are automatically included and will be bound by any settlement that may be reached. While no settlement has been proposed for the YieldPlus class members, securities class action settlements often offer scant compensation to investors.
The losses suffered by YieldPlus investors were ultimately caused by Schwab’s attempt to increase the yield of its YieldPlus Fund to attract money market investors. Schwab did so by increasing the fund’s exposure to high-risk structured finance securities. But Schwab advertised the fund as a low-risk alternative to money market funds that may fluctuate minimally. That was plainly untrue. Moreover, Schwab omitted to disclose the real risks of the fund with the required specificity, and instead “papered over” these risks with boilerplate risk disclosures, such as “the net asset value (NAV) of an ultra-short bond fund will fluctuate.”
From June 2007 through June 2008, the YieldPlus Fund lost over 30% of its value ? not at all what investors were led to believe by Schwab when it sold them the fund. The staff of the U. S. Securities and Exchange Commission apparently agrees. The SEC staff recently notified Schwab that it intends to recommend the filing of a civil enforcement action against Schwab Investments, Charles Schwab Investment Management, Charles Schwab & Co., Inc. and the president of the funds for possible violations of the securities laws with respect to the Schwab YieldPlus Fund.
YieldPlus investors who want to pursue individual actions and who have not already opted out of the class action need to act promptly to preserve their right to file individual arbitration claims against Schwab. Page Perry is co-counsel in arbitration claims across the country relating to the YieldPlus Fund. To date, six arbitration claims brought by Page Perry and co-counsel have gone to trial and resulted in awards issued by the arbitration panel in favor of our clients.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and individual investors in YieldPlus actions. For further information, please contact us.
The Schwab YieldPlus Pendency Notice can be viewed in its entirety at www.hbsslaw.com/schw.