Recently in YieldPlus Category

January 11, 2011

Charles Schwab Agrees to Pay SEC $118 Million to Settle YieldPlus Charges

Today, Charles Schwab & Co. and Charles Schwab Investment Management agreed to settle securities fraud charges filed by the Securities & Exchange Commission (SEC) stemming from the YieldPlus fund. The settlement included an agreement to pay $118 million into a "Fair Fund" which will be distributed to harmed investors. In a related matter, the Financial Industry Regulatory Authority (FINRA) entered into an agreement with Schwab for the payment of $18 million to investors that will also be included in the Fair Fund. The payment of Fair Fund distributions is subject to approval by the U.S. District Court for the Northern District of California.

The findings made by the SEC and FINRA are set forth in the following press releases:

SEC Press Release

FINRA Press Release

As part of the settlement, Schwab neither admitted nor denied any of the findings issued by the SEC and FINRA.

November 9, 2010

Charles Schwab Backs Out of Yield Plus Class Action Settlement

The San Francisco Chronicle reported today that Charles Schwab plans to terminate their agreement to settle a class action lawsuit filed on behalf of shareholders in Schwab's YieldPlus fund--an ultra-short-term-bond fund. According to the Chronicle, Schwab has already put half of the $235 million settlement amount in escrow with the remainder to be paid in January. A hearing on Schwab's decision is scheduled for November 18.

Numerous YieldPlus investors elected to opt out of the class action in order to pursue an individual securities arbitration claim against Schwab to recover their losses. The opt out deadline was December 28, 2009. According to an April 21, 2010, article in the S.F. Chronicle, Schwab paid approximately $48 million to resolve individual customer arbitration claims while another 194 individual arbitration claims seeking $34 million in damages were still pending at the time of the Chronicle's article.

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April 20, 2010

Charles Schwab Settles YieldPlus Class Action Securities Lawsuit

Charles Schwab has agreed to settle a securities class action lawsuit filed in San Francisco federal court on behalf of investors who purchased its YieldPlus Fund. Without admitting liability, Charles Schwab has agreed to pay the plaintiffs $200 million in order to avoid trial which had been scheduled for May. Losses sought by the plaintiffs in the class action were as much as $802 million. The settlement has yet to be approved by the court. Also, investigations into Schwab's handling of the YieldPlus fund by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are still ongoing.

December 1, 2009

Reminder to California Schwab Yield Plus Investors: Class Action Opt Out Deadline Looming

Investors who purchased the Schwab Yield Plus (SWYPX and SWYSX) money market funds, have until December 28, 2009, to decide whether to remain in the pending class action lawsuit or affirmatively "opt out" and pursue a securities arbitration claim. The following investors will be automatically included as class members if they do not take steps to opt out of the class action:

  1. Those that purchased the funds between November 15, 2006, and March 17, 2008;
  2. Those that purchased the funds between May 31, 2006, and March 17, 2008; and
  3. Any California resident who held the funds on September 1, 2006.

Investors should carefully consider whether or not opting out is the right choice for them based on their individual circumstances. Investors who elect to opt out of the class action can join hundreds of other investors who have filed their own independent securities arbitration claims with the Financial Industry Regulatory Authority (FINRA).

For more information, please see our previous blog posting: Securities Arbitration vs. Class Actions: Consider Your Options

October 15, 2009

Schwab Receives Wells Notice From SEC Regarding Schwab YieldPlus Fund and Total Bond Market Fund

In a regulatory filing today, San Francisco-based Charles Schwab reported that it received a Wells Notice from the Securities and Exchange Commission (SEC) for alleged securities law vioations regarding its Schwab YieldPlus and Total Bond Market Fund.

A Wells Notice is is not a finding of wrongdoing. It is letter from the SEC advising the recipient of the enforcement staff's decision to recommend that the SEC bring enforcement proceedings against the recipient. The letter will specify the violations that the SEC staff believes to have occurred and the relief the SEC intends to seek and the forum in which the SEC intends to bring an action. The violations will be described in fairly general terms.

More Information:

Schwab YieldPlus Fund

Charles Schwab & Co.

October 14, 2009

Deadline to Opt-Out of Schwab YieldPlus Class Action Set for December 28, 2009

A Notice of Pendency of Class Action was issued in the class action matter In re Schwab Corp. Securities Litigation currently pending in San Francisco federal court. Investors who purchased shares of the Schwab YieldPlus Fund that qualify as class members will be automatically included in the class action, unless they submit a request for exclusion from class membership. The court's deadline for opting out is December 28, 2009. YieldPlus investors who opt out may want to consider pursuing a claim for their losses through arbitration before the Financial Industry Regulatory Authority (FINRA), as many investors have already done.

For more information, please click on the following links:

View Notice of Pendency of Class Action

Blog Post: Securities Arbitration vs. Class Actions: Consider Your Options

More YieldPlus Blog Postings

Frequently Asked Questions About Securities Arbitration

September 10, 2009

California Court Certifies Schwab YieldPlus Class Action

A San Francisco federal judge has issued an order certifying a class action lawsuit against Charles Schwab & Co. alleging securities law violations in connection with Schwab's beleaguered YieldPlus Fund. The parties are required to submit to the court by September 10, 2009, a proposed timeline for class members that want to opt out of the class action. An updated blog posting will be issued once the opt out deadline is known. Click here to view all YieldPlus blog postings.

Three Classes of Investors Are Included in the Class Action

The court's order creates three different classes of plaintiffs. The three classes are:

  1. Yield Plus investors that acquired shares between November 15, 2006, and March 17, 2008.
  2. YieldPlus investors that acquired shares between May 31, 2006, and March 17, 2008.
  3. California residents who held shares in the YieldPlus fund on September 1, 2006.
YieldPlus investors not included in the above categories are excluded from the class action. However, investors omitted from the class still have the option of filing their own securities arbitration claim against Schwab to recover their YieldPlus losses. Unlike class actions, which must be pursued in court, individual claims must be submitted to arbitration before the Financial Industry Regulatory Authority (FINRA).

Class Members Can Opt Out of the Class Action

Members included the class action also have the right to opt out of the class. Class members that elect to opt out can file a claim for their YieldPlus losses with FINRA.. For more information about opting out of a class action and submitting an arbitration claim, please see our blog posting: Securities Arbitration vs. Class Actions: Consider Your Options

Click here to view all YieldPlus blog postings.

July 21, 2009

San Francisco's Charles Schwab Corp. Facing New Securities Fraud Allegations Over the Sale of Auction Rate Securities

Yesterday, San Francisco-based Charles Schwab Corporation publicly denied recent allegations that it engaged in fraudulent marketing practices in the selling of Auction Rate Securities (ARS). These latest securities fraud allegations come from New York Attorney General Andrew Cuomo who has purportedly uncovered emails and testimony establishing that Charles Schwab brokers had little knowledge about these ARS investments when they recommended them to their unsuspecting customers. Cuomo's office is also alleging that Schwab misrepresented these securities as a safe investment and failed to warn its customers about the impending collapse of the ARS market. So far, Charles Schwab has denied the attorney general's allegations.

Schwab is already facing a slew of customer arbitration claims that allege similar misconduct in connection with the sale of its YieldPlus funds that were marketed to conservative investors as low-risk investments. I have been monitoring these cases and Schwab has been aggressively defending these cases with mixed results according to the results in cases that have already gone to hearing.

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Continue reading "San Francisco's Charles Schwab Corp. Facing New Securities Fraud Allegations Over the Sale of Auction Rate Securities" »

January 28, 2009

Securities Arbitration vs. Class Actions: Consider Your Options

Securities class actions are on the rise again. In 2008, there were 210 federal securities class actions filed, nearly half involved firms in the financial services sector.

Class Actions: Not for Everyone

For millions of consumers, participating in a securities class action is an almost effortless process. Class members are seldom required to do much more than submit a proof of claim and wait for their share of the recovery.

The primary disadvantage is that, even though class action settlements can be considerable, they must be distributed to a large class of customers. As a result, individual recoveries are often quite small in comparison to the multi-million dollar settlements and awards paid out by large corporations.

Opting Out of Securities Class Actions

Another option that is frequently overlooked is "opting out" of a securities class action and pursuing an independent arbitration claim. Customers that have suffered substantial investment losses could recover significantly more by pursuing their own individual claim.

The "Opt Out" Deadline

If you recently discovered that you are a member of a pending securities class action, you will have a limited period of time to decide whether to participate in the lawsuit or pursue your own claim in arbitration. If you do nothing, you may be automatically included in the class.

See also: Are Securities Arbitration Cases More Financially Rewarding for Investors than Class Actions?

Schwab Yield Plus Class Action

The Schwab Yield Plus case is a recent example of a class action that is awaiting certification by the Court. The pending Schwab Yield Plus class action applies to investors who purchased the Schwab Yield Plus (SWYPX and SWYSX) money market funds.

The class action complaint alleges that Charles Schwab Corporation issued untrue statements regarding the lack of diversification of these funds and the extent of investments assigned to sub-prime mortgage backed and related securities. The complaint also alleges the funds registration statements and prospectuses contained untrue statements of material facts, and omitted important information regarding the funds' investments, ultimately misleading investors.

If the Court certifies the case as a class action, a notice will be sent out to investors in these funds advising them of the class action and their right to opt out.

Click here to view all "YieldPlus" blog postings.

Click here to view all "Class Action" blog postings.

Carefully consider your options before participating in a class action. If you believe you have a meritorious securities claim, speak with a securities attorney to discuss your rights and the advisability of opting out based on your individual circumstances.