Charles Schwab’s recent article in the Wall Street Journal, entitled “Brokers Aren’t Responsible for Bad Bets,” is a cynical attempt to change the subject that compares very unfavorably with the intellectual honesty of Warren Buffet, according to Susan Antilla in her August 21 article in Bloomberg.com. Mr. Schwab’s article was in response to a lawsuit filed against Charles Schwab & Co., Inc. by the Attorney General of New York. The lawsuit alleges, in essence, that Schwab owed its customers a duty to properly understand and make accurate representations concerning the auction rate securities it sold, and that Schwab breached that duty by misrepresenting them as liquid, short-term investments without discussing the risks. These representations gave investors a false sense of security that their investments would always be liquid when auction rate securities, in fact, faced significant, inherent liquidity risks. The Complaint can be found at http://www.oag.state.ny.us/media_center/2009/aug/aug17a_09.html.
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