August 2009 Archives

August 17, 2009

Securities Fraud Case Filed Against San Francisco-Based Charles Schwab for Fraudulent Sales of Auction Rate Securities (ARS)

Today, New York Attorney General Andrew Cuomo filed a securities fraud lawsuit against San Francisco-based Charles Schwab & Co. charging the firm with making false representations in the sale of auction rate securities (ARS). According to the complaint filed by the Attorney General, Schwab misrepresented auction rate securities as suitable for customers seeking a safe and liquid investment. The Attorney General has obtained telephone recordings of conversation between Schwab brokers and customers, including one instance where a broker made misrepresentations to their customer stating that auction rate securities are "great alternatives to cash." Schwab sold hundreds of millions of dollars worth of auction rate securities to its customers who were undoubtedly mislead about inherent risks associated with these complex investments.

See related blog posting: San Francisco's Charles Schwab Corp. Facing New Securities Fraud Allegations Over the Sale of Auction Rate Securities [07/21/200]