Investors across the country with accounts in Charles Schwab Corp. have learned the hard way that their so-called “money market fund” wasn’t as safe as they thought it was. The fund in question, Schwab’s High Yield Plus Select Fund (SWYSX) has declined twenty-two percent since January 2, 2007 due to excessive investments by the fund in subprime mortgage-related products. Unfortunately, many financial advisors put their clients’ short-term money into the fund. Many of the advisors have complained that they believed the fund was essentially a low-risk money-market fund and, indeed, Schwab and other firms have often promoted these funds as cash alternatives since 2003 when money market rates hovered at around one percent. The problem is that neither Schwab nor advisors buying the fund for their clients highlighted the extra risk in the fund, preferring, naturally, to highlight only the extra yield the fund could achieve while simultaneously accepting higher commissions. As Peter Crane, Editor of Money Fund Intelligence of Westboro, Massachusetts, pointed out in a recent article in Investment News, “Nobody gets paid to put investors in cash.”
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 individual and institutional investors regarding their subprime problems. For further information, please contact us.