Investment Fraud Lawyer Blog

A Financial Industry Regulatory Authority (FINRA) arbitrator awarded damages to Mr. Weigel as a result of losses sustained in the Schwab YieldPlus Fund. The panel awarded the Mr. Weigel $19,400 in a claim submitted under FINRA’s special “simplified” procedure for claims of $25,000 or less (exclusive of interest and costs). Mr. Weigel’s actual trading loss in Schwab YieldPlus Fund was $22,279 while his net out of pocket loss was $15,359. In a simplified claim, a single arbitrator decides the case based on the paper submissions of the parties without an in-person hearing.

Continue reading "The Beat Goes On - Schwab Loses Another Schwab YieldPlus Case" »

Time is running out for Schwab YieldPlus investors to opt out of the class action. A properly completed Request for Exclusion must be received by the class action administrator no later than December 28, 2009. With the holidays, the time to do that is running very short.

Continue reading "Less Than 15 Days are Left for Schwab YieldPlus Investors to Preserve their Rights" »

A federal court recently certified a class action against Charles Schwab & Company, Inc. brought on behalf of investors in the Schwab YieldPlus Fund. The certification means that the lawsuit can proceed as a class action; no settlement has been reached. Most importantly for YieldPlus investors with significant losses, the deadline to be excluded from this class action is December 28, 2009.

Continue reading "Only 40 Days Left for Schwab YieldPlus Investors to Preserve their Rights" »

A federal court recently certified a class action against Charles Schwab & Company, Inc. brought on behalf of investors in the Schwab YieldPlus Fund. The certification means that the lawsuit can proceed as a class action; no settlement has been reached. Most importantly for YieldPlus investors with significant losses, the deadline to be excluded from this class action is December 28, 2009. Otherwise, YieldPlus investors who happen to be class members (i.e., who purchased the YieldPlus Fund within certain dates) are automatically included and will be bound by any settlement that may be reached.

Continue reading "Time is Running Out on Schwab YieldPlus Investors who Want to Opt Out of the Class Action " »

Investors in Charles Schwab’s YieldPlus Fund need to be aware of their options in light of the recent certification of a class action brought by YieldPlus investors against Schwab. Most importantly, YieldPlus investors who are class members need to request exclusion from the class if they wish to maintain individual claims against Charles Schwab (even if those claims are already filed). Requests for exclusion must be properly filed and received by the claims administrator no later than Monday, December 28, 2009.

Continue reading "Schwab YieldPlus Investors Should Consider Their Options" »

The threatened SEC enforcement action against The Charles Schwab Corp. relating to sales of its YieldPlus Fund increases the likelihood that Schwab will need to settle a class action and FINRA arbitrations involving the YieldPlus Fund, according to industry analysts, as reported by Bruce Kelly on October 18 in InvestmentNews. On October 14, Schwab disclosed that it had received a Wells notice from the staff of the U.S. Securities and Exchange Commission that the staff intends to recommend the filing of a civil enforcement action against Schwab Investments, Charles Schwab Investment Management, Charles Schwab & Co., Inc. and the president of the funds for possible violations of the securities laws with respect to the Schwab YieldPlus Fund and the Schwab Total Bond Market Fund.

Continue reading "SEC Threatens Action Over Schwab YieldPlus Fund" »

Investors in Charles Schwab’s YieldPlus Fund have important decisions to make. Recently, a California Federal court tentatively certified a class action brought by YieldPlus investors against Schwab. YieldPlus investors need to determine (i) whether they are members of one or more of the designated classes, (ii) if so, whether they wish to remain in the class action or pursue individual claims against Schwab, and (iii) what actions, if any, they need to take.

Continue reading "Investor Alert: Schwab YieldPlus Class Notice Issued" »

A Los Angeles based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded damages to a California resident as a result of losses sustained in the Charles Schwab YieldPlus Fund. The panel awarded the Eliots $80,000, plus an additional $16,000 designated as expert witness fees, plus $300.00 as reimbursement for the non-refundable portion of the initial filing fee, and assessed the entire cost of the arbitration proceeding against Charles Schwab (SCHW).

Continue reading "The Beat Goes On - Hedge Fund Manager Wins Large Award in Schwab YieldPlus Case" »

A Los Angeles based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded market adjusted damages to a California resident as a result of losses sustained in the Charles Schwab YieldPlus Fund. The panel awarded Victor Chang 100 percent of his market-adjusted damages of $74,745.00, plus an additional $13,500.00 designated as expert witness fees, plus $225.00 as reimbursement for the non-refundable portion of the initial filing fee, and assessed the entire cost of the arbitration proceeding against Charles Schwab (SCHW).

Continue reading "Investor Wins Full Market Adjusted Damages in Schwab YieldPlus Case " »

A Nevada based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded damages to a Nevada couple as a result of losses sustained in the Charles Schwab YieldPlus Fund. The panel awarded the Raymond and Elsie Kelly 100 percent of their net out of pocket losses of $74,430.77 plus interest at the rate of 3.25% per annum from July 8, 2008 through August 26, 2009, plus an additional $25,650.00 designated as attorney’s fees, and assessed the entire cost of the arbitration proceeding against Charles Schwab (SCHW).

Continue reading "Investors Recover Damages Plus Attorneys Fees from Schwab in Schwab YieldPlus Case" »

A California federal court has issued an order allowing a Schwab YieldPlus Fund lawsuit filed against Charles Schwab to proceed as class action. The Fund is also the subject of numerous FINRA arbitrations as well as this class action. The order, filed on August 21, 2009, certified three classes, consisting of two federal classes of investors with claims under Sections 11 and 12 of the Federal Securities Act, and a single class of California investors with an unfair competition claim alleging that the fund changed its investment policies regarding asset concentration without a required shareholder vote.

Continue reading "Court Certifies Schwab YieldPlus Class Action but Leaves Many YieldPlus Investors "Out in the Cold"" »

Once regarded as the retail investors’ friend, and somehow different from other fee-driven brokerage firms, Charles Schwab has been battling retail investors who were sold the Schwab YieldPlus Fund as a cash-equivalent investment, similar to a money market fund. The Schwab YieldPlus Fund has lost approximately half its value as a result of undisclosed, high-risk non-conventional investments. Schwab now has another black mark on its investor friendly image – deceptive sales of Lehman Brothers “100% Principal Protected” Notes.

Continue reading "Schwab Sued for Deceptive Sales of Lehman Principal Protected Notes" »

Evergreen Investment Management Company (“Evergreen”), a unit of Wells Fargo & Co., has agreed to pay more than $40 million to settle an enforcement action by the Securities and Exchange Commission (“SEC”) and the Massachusetts Securities Division, according to articles in the Wall Street Journal and Reuters. Evergreen was a subsidiary of Wachovia at the time of the violation, according to Reuters.

Continue reading "Evergreen Pays Over $40 Million to Settle SEC Charges that it Overvalued Mortgage-Backed Investments" »

The SEC has taken action that should send shivers up the spines of many of Wall Street investment banks. The SEC recently charged 10 brokers associated with the now-defunct Brookstreet Securities Corp. (out of Irvine, California) with fraud for falsely marketing investments in complex derivative securities backed by mortgages as safe and suitable for retirees and as appropriate for those with conservative investment goals. In particular, the defendants portrayed risky collateralized mortgage obligations as safe investments to more than 750 customers. The customers subsequently incurred over $35 million in losses investing in these “low risk” investments. Seven of the ten brokers were based in West Palm Beach, Florida, and the others were based in Hawaii, Oregon, and Montana. FINRA, the Financial Industry Regulatory Authority, has brought a similar complaint alleging fraud against six other former Brookstreet brokers.

Continue reading "Is the SEC Willing to Sue the "Big Boys" for Misleading the Public Regarding the Risks of Structured Finance Securities?" »

Tax time is an excellent time for investors to evaluate their investments, to determine whether their investments have been appropriately handled, and to reevaluate their investment objectives and risk tolerance. Taxpayers or their accountants have assembled and are reviewing (or have already reviewed) a number of financial documents in preparation for the filing of income tax returns. Investors should carefully review the status of their investments and their asset allocation to determine whether these items are in accordance with their objectives and status in life.

Continue reading "Now is the Best Time to Review your Investment Portfolio" »

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.

Continue reading "Schwab Loses Big in a YieldPlus Case" »

The subprime and credit crises have resulted in a surge of fraudulent misrepresentation and omission cases against Wall Street firms. A rising stock market concealed many such abuses because values were rising, making fraudulent misrepresentations and omissions hard to identify. Recently, however, many of these misrepresentations and omissions have become apparent. For example, many risk-averse investors with conservative objectives have recently discovered that they have sustained huge losses on investments that were misrepresented to them as being very safe and conservative.

Perhaps even more critical than what was affirmatively misrepresented to investors in these cases is what the firms and their brokers omitted to disclose to investors about these securities. The bedrock principle of the securities laws is the duty of complete and truthful disclosure. Once a broker undertakes to disclose any information about a security to an investor or potential investor, the disclosure must be complete and truthful in all material respects. This is an absolute requirement. It applies to every broker (whether discount or full service), every security, and every person who receives any information about a security (rich or poor, financially sophisticated or not, whether or not that person has an account with the broker). If a broker fails to provide complete and truthful disclosure, and the undisclosed information would have been important in deciding whether or not to invest, the investor has a legal right of action against the broker and the firm to recover resulting losses and damages.

Continue reading "Investor Misrepresentation And Omission Claims Escalate" »

The subprime and credit crises affecting the economy have revealed an array of suitability abuses by Wall Street investment firms. While a rising stock market hides many abuses by brokerage firms, suitability abuses are more easily identifiable when times are tough. For example, many risk-averse investors with conservative objectives have recently discovered that they have sustained huge losses on unsuitable investments recommended to them as being very safe. Auction rate securities, short-term bond funds, AAA rated debt securities, and mortgage heavy mutual funds provide recent examples of suitability abuses.

Continue reading "Investor Suitability Claims on the Rise" »

Recent actions by Charles Schwab in offering money to investors in its Yield Plus Bond Fund are tantamount to an admission that the fund was misrepresented to investors. Schwab had marketed the Yield plus Fund as a safe, conservative short-term bond fund that was a cash equivalent and offered low volatility. It was pitched as an alternative to a money-market fund. Yet the Yield Plus Fund has lost approximately 20% of its value over the past year.

With a marketing description such as that, it is obvious that Schwab routinely recommended the Yield Plus Fund to investors whose objectives were safety and preservation of capital. The Yield Plus Fund, however, was heavily invested in mortgage-backed securities and was clearly not a safe investment. The fund’s asset base peaked last year at $13.5 billion and had dropped to $1.5 billion earlier this month. The fund has had such poor results that even the Schwab Charitable Fund has withdrawn donor investments from the Yield Plus Fund.

Continue reading "Schwab Admitting Responsibility For Mis-Marketing Its Yield Plus Fund?" »

Many bond funds, which are supposed to be the pillars of stability during times of market upheaval, are suffering serious subprime mortgage investment losses. The Lehman Brothers U.S. Aggregate bond index, which tracks taxable bonds, Treasury notes, corporates, and some mortgage securities, is up 2.3% from January 1 through April 4 of this year. Yet, as reported by Shefali Anand of The Wall Street Journal on April 8, 2008, 20 percent of all investment-grade U.S. taxable bond funds are in the red for that same period.

The Regions Morgan Keegan Select Intermediate Bond fund is down 44% since the start of the year and 72% over the past year. Since the start of the year, State Street Global Advisors Yield Plus is down 18% and Schwab YieldPlus has fallen 23%.

Many bond funds have been dragged down by the massive sell off of mortgage securities because of the subprime crisis. Among the casualties are Metropolitan Strategic Fund (down 8% this quarter and 12% for one year), UBS Absolute Return Bond (down 8.5% year to date and nearly 15% over the past year), and Principal Investors Ultra Short Bond Fund (down nearly 7% this quarter and nearly 10% over the past year). Metropolitan West had more than half of its investments in mortgage and other asset-backed securities as of December 31, 2007.

Continue reading ""Safe" Bond Funds Get the Blues" »