Reno FINRA Panel Awards More Than $100K In Schwab YieldPlus Claim
On Sept. 4, a FINRA (Financial Industry Regulatory Authority) arbitration panel in Reno, Nevada, awarded more than $100,000 to investors for financial losses they suffered in the Charles Schwab YieldPlus Funds (Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX). The panel granted an investor what’s known as a “make whole award,” finding broker Charles Schwab (SCHW) liable for 100% of claimants’ net out-of-pocket losses of $74,430, interest and $25,650 in attorney fees. In addition, FINRA assessed the entire costs of the arbitration proceeding - $5,250 - against Charles Schwab.
The Schwab YieldPlus Funds were first offered by Charles Schwab in 2004 as a safe alternative to money-market investments and as a cash substitute. According to the company, the funds were designed to preserve capital, while generating income with minimal price fluctuation.
Ultimately, those representations did not hold water. More than 50% of the Schwab YieldPlus Funds’ assets were invested in risky mortgage-related securities. When the housing market collapsed in late 2007, investors who owned shares of Schwab YieldPlus suffered huge and unexpected financial losses on an investment they had been told was a conservative, low-risk product and a money-market substitute.
From June 2007 through June 2008, the YieldPlus Funds lost 31.7%; by comparison, similar ultra short bond funds experienced little or no losses.
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
