An arbitration panel in Minnesota has ordered Charles Schwab to pay $542,340 to an investor in the Schwab YieldPlus Fund. The amount of the claimed loss was $667,000.00. Schwab had recommended that the investor exchange his money market holdings for shares of the YieldPlus Fund. Schwab advertised the YieldPlus Fund as a suitable alternative to a money market fund, and said that its share price could only fluctuate minimally. Since January 1, 2007, however, the YieldPlus Fund has lost over 38% – hardly comparable to a money market fund. The YieldPlus fund was among the worst performing funds in the ultra-short term bond fund category due to its undisclosed over-concentration in and big bets on mortgage-backed securities and other asset-backed obligations.
In an earlier case, a single arbitrator in San Francisco (where Schwab’s corporate headquarters is located), ordered Schwab to pay the investor 100% of his losses of $18,425.00 plus interest and the filing fee.
These awards are the tip of the iceberg. Schwab is facing many similar claims across the country. In addition, Schwab has been sued in various class action lawsuits in the U.S. District Courts in California and Massachusetts. In a nutshell, these class action lawsuits claim that Charles Schwab misrepresented the Schwab YieldPlus Fund as a safe alternative to money market funds, omitted or misrepresented other important facts about the funds, and made the Schwab YieldPlus Fund appear less risky than it was.
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 with investment problems. Page Perry is co-lead counsel in arbitration claims across the country relating to the YieldPlus Fund. For further information, please contact us.