Archive for the “Charles Schwab” Category

Investors with significant financial losses in the Charles Schwab YieldPlus Funds face a key deadline to decide whether to stay in the Schwab YieldPlus class-action lawsuit or submit a written request for exclusion and pursue an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA).

If investors do opt for class-action exclusion, their requests must be received by Dec. 28, 2009, at the following address:

Notice Administrator

Re: Schwab Corp. Secs. Litigation Exclusions

c/o Gilardi & Co. LLC

P.O. Box 808061

Petaluma, CA,  94975-8061

In addition, there are several other important steps that investors must follow if they elect to opt out of the Schwab YieldPlus class action lawsuit. They are:

• Investors must provide a written statement requesting exclusion from the Schwab YieldPlus class-action lawsuit;
• Investors must sign and date the request and include their mailing address; and
• Investors must mail the above information by Dec. 28, 2009, to:

Notice Administrator

Re: Schwab Corp. Secs. Litigation Exclusions

c/o Gilardi & Co. LLC

P.O. Box 808061

Petaluma, CA,  94975-8061

Other details and information about the opt-out process are available in a PDF document titled October 12, 2009, Notice of Pendency, on the Website, http://www.hbsslaw.com/files/Notice of Pendency 1012091255373465312.pdf

Investors also will find information about the Schwab YieldPlus class-action lawsuit from the plaintiffs’ counsel Web site www.hbsslaw.com or by calling 1-206-623-7292.

Remember, all requests for exclusion from the YieldPlus class action must be received by Monday, Dec. 28, 2009. After that date, investors will no longer be able to submit an opt-out request.

Tell us about your situation with Schwab YieldPlus Funds by leaving a message in the Comment Box below or via the Contact Us form. We want to advise you on your legal options.

The Charles Schwab YieldPlus Funds - the Charles Schwab YieldPlus Fund (SWYPX) and Charles Schwab Plus Select (SWYSX) - have taken yet another hit, with a Los Angeles Financial Industry Regulatory Authority (FINRA) arbitration panel awarding the Eliot family $80,000, plus an additional $16,000 in expert witness fees, for their claim against Charles Schwab (SCHW). In addition, the panel assessed the entire cost of the arbitration proceeding against Schwab.

FINRA’s Sept. 25 ruling (Case # 08-02552) is significant for several reasons. First, the damages awarded in the case are approximately 1.23 times the amount of claimants’ net out-of-pocket losses. Second, Mr. Eliot is a noted hedge fund manager, a fact that demonstrates even an experienced financial professional was deceived about the true risks associated with the Schwab YieldPlus Funds.

The investor’s predicament with his YieldPlus investments is similar to that of thousands of investors across the country who lost millions of dollars the ultra-short bond funds. The funds were first offered in 2004 by Charles Schwab as investments comparable to money-market funds - fixed-income products designed for conservative-minded investors who wanted to preserve capital while generating income. Contrary to those representations, however, Charles Schwab invested more than 50% of the funds’ assets in private label mortgage-backed securities. As a result of the concentration in a single risky industry, investors were exposed to substantial risk of loss on the principal of their investment.

In July 2007, net assets in the Schwab YieldPlus Funds totaled $13.5 billion; by May 31, 2008, assets had fallen to $507 million.

By comparison, shares of other ultra short-term bond funds lost, on average, less than 2% of their value from June 30, 2007, to June 30, 2008. In that same time period, shares of the Schwab YieldPlus Fund fell by more than 33%. Click here for more information about Schwab YieldPlus losses and investor options.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options regarding Schwab YieldPlus investments. Leave a message below or in the Contact Us form. We want to counsel you on your legal options.

On Sept. 25, a Los Angeles arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded an investor $125,729 in compensatory damages for her claim against broker Charles Schwab and the Schwab YieldPlus Funds. FINRA also held Schwab liable for $3,375 in arbitration costs.

The case against Schwab focused on losses that were sustained in the Schwab YieldPlus Funds - Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX). According to the complaint (FINRA Case No. 08-03215), the following causes of action were cited by the investor and her attorney, Ryan K. Bakhtiari of Aidikoff, Uhl & Bakhtiari, Beverly Hills, California: Breach of fiduciary duty, breach of written contract, constructive fraud, misrepresentation and omissions, negligent supervision and violation of the California Securities Act.

The Schwab YieldPlus Funds are at the center of numerous FINRA arbitration claims, with investors charging that Charles Schwab misrepresented the ultra-short bond funds as an alternative investment to money market accounts and long-term bond funds. Investors further contend that Schwab stated the YieldPlus Funds would provide increased yield with only marginally higher risks than a money market fund.

Investors later learned that the Schwab YieldPlus Funds followed a high-risk, speculative investing strategy, with more than 50% of the funds’ assets placed in mortgage-related securities. This over-concentration in housing-related investments in 2007 and 2008 exposed investors to obvious risks that ultimately produced huge financial losses for them.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted Schwab YieldPlus investment losses.

The flood of arbitration claims dogging San Francisco-based broker Charles Schwab (SCHW) are finally being heard by the Financial Industry Regulatory Authority (FINRA), with more rulings weighing on the side of investors who lost money in the Schwab YieldPlus Funds - Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX).

On July 16, a San Diego FINRA arbitration panel awarded an investor 100 percent of net out of pocket losses of $157,498, plus expert witness costs. In addition, FINRA assessed the entire cost of the arbitration proceeding (FINRA Case: 08-02082) against Charles Schwab.

“Although Charles Schwab recommended the purchase of the Schwab YieldPlus Funds as safe conservative cash alternatives to investors, the evidence establishes that the funds were over concentrated in toxic mortgage backed securities,” said the investor’s attorney Ryan K. Bakhtiari of Aidikoff, Uhl & Bakhtiari, Beverly Hills, Calif.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with their Schwab YieldPlus investment losses.

On Sept. 11, an investor found himself successful in his case against Charles Schwab (SCHW) and the Schwab YieldPlus Funds - Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX). A Los Angeles, California, arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded the investor 100% of his net out-of-pocket losses of $74,745, plus $13,500 for expert witness fees. In addition, FINRA assessed the entire costs of the arbitration proceeding - $3,750 - against Charles Schwab.

The complaint against the San Francisco-based “Talk To Chuck” broker mirrors hundreds of other arbitration claims that have been filed with FINRA over allegations Charles Schwab misrepresented the Schwab YieldPlus Funds as a safe alternative to money market investments and as a cash substitute. According to Schwab, the funds were designed to preserve capital while generating income, with relatively low risk.

Instead, evidence shows that the Schwab YieldPlus Funds were loaded up with risky and speculative mortgage and asset backed securities. More than 50% of the funds’ assets were invested in these types of products. As a result of the concentration in a single risky industry, investors were exposed to substantial risk of loss on the principal of their investment.

In July 2007, net assets in the Schwab YieldPlus Funds totaled $13.5 billion; by May 31, 2008, assets had plunged by an astonishing 96% to $507 million.

By comparison, shares of other ultra short-term bond funds lost on average less than 2% of their value from June 30, 2007, to June 30, 2008. In that same time period, shares of the Schwab YieldPlus Fund fell by more than 33%.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with their Schwab YieldPlus investment losses.

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.

The Schwab YieldPlus scorecard keeps ticking up in favor of investors. On Aug. 11, 2009, a Houston, Texas, FINRA (Financial Industry Regulatory Authority) arbitration panel ruled against San Francisco-based broker Charles Schwab in a claim involving the Schwab YieldPlus Funds. The panel awarded the claimant in the case, $116,000 in compensatory damages and costs. In addition, FINRA assessed $3,375 of the costs associated with the arbitration proceeding to Schwab.

The attorneys included the laws firms of Aidikoff Uhl & Bahktiari of Beverly Hills, California; David P. Meyer & Associates Co. LPA, Columbus, Ohio; and Maddox Hargett & Caruso P.C., Indianapolis, Indiana.

In the complaint (FINRA No. 08-02698), the investor alleges that Schwab misrepresented an ultra-short bond fund known as Schwab YieldPlus as an alternative to money market investments and long-term bond funds. The brokerage further asserted that the fund would provide increased yield with only marginally higher risk than a money market fund, according to the complaint.

In addition to these characterizations, the investor alleges that the Schwab YieldPlus Fund proceeded to follow a high-risk investing strategy, one that entailed investments of more than 50% of the Schwab YieldPlus Funds’ assets in mortgage-related securities. Ultimately, this over-concentration in housing-related investments in 2007 and 2008 exposed investors to substantial risks that resulted in significant losses to Schwab YieldPlus investors.

Among the causes of action listed in the complaint: breach of fiduciary duty; breach of written contract; constructive fraud; fraud by misrepresentation and omission; negligence; negligent supervision; and violations of the Texas Securities Act.

If you are an individual or institutional investor and have questions about your Schwab YieldPlus investments leave us a comment in the space below or please contact us.

Aug. 21, 2009, signaled a key development in the legal arena for the Charles Schwab YieldPlus Funds. On that date, a federal court issued an order allowing a lawsuit involving the Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX) to proceed as a class action. For many investors who sustained losses in the YieldPlus Funds, this news means they must now either stay in the class action lawsuit or “opt out” if they wish to file an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA).

Investors need to understand that you are generally in a class action unless you formally ask to be excluded. To do this, you must opt out of the class action or you will be bound by its results.

In many instances, an individual FINRA arbitration might be a better legal avenue to pursue for retail and institutional investors who’ve suffered significant financial losses due to issues involving fraudulent investments, unauthorized trades and unsuitable investments or, in the case of the Schwab YieldPlus Funds, misrepresentation. However, if an investor’s losses are small, it may not be economically feasible to proceed in a FINRA arbitration and the Schwab class action lawsuit may therefore be a more viable option.

Aggrieved investors should consider carefully whether their rights are best represented through class action lawsuits or securities arbitration. This is especially true for Schwab Yield Plus (SWYPX and SWYSX) investors. If you are an individual or institutional investor and have questions about your Schwab YieldPlus investments or would like more information about how to opt out of the Charles Schwab class action, please contact us.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted Schwab YieldPlus investment losses.

As arbitration claims against San Francisco-based broker Charles Schwab and the Schwab YieldPlus Funds - the Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX) - escalate, a California federal court judge issued an order on Aug. 21 allowing a Schwab YieldPlus Fund lawsuit to proceed as a class action. For many investors who sustained losses in the Schwab YieldPlus Funds, this newest legal development means they must now either stay in the class action lawsuit or “opt out” if they wish to file an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA formally NASD).

Aggrieved investors need to weigh their decision carefully in determining how to proceed in the Schwab YieldPlus class-action lawsuit versus opting out and proceeding in an individual FINRA arbitration. In general, an individual FINRA arbitration may present greater recovery opportunities for individual and institutional investors if they sustained significant losses. However, where an investor’s losses are small, it might not be economically feasible to proceed in an arbitration claim with FINRA and the Schwab class action lawsuit might be a viable option.

It is important to understand that you are generally in a class action unless you formally ask to be excluded. This means you need to opt out of the class action or you will be bound by its results. For information on how to opt out of the Charles Schwab class action, please contact us at 866-827-6537.

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.

A Reno, Nevada, arbitration panel of the Financial Industry Regulatory Authority (FINRA) has awarded damages to investors for the losses they suffered in the Charles Schwab YieldPlus Funds. The panel granted Raymond and Elsie Kelly a make whole award, finding Charles Schwab (SCHW) liable for 100% of their net out-of-pocket losses of $74,430, interest and $25,650 in attorney fees. In addition, the FINRA arbitration panel assessed the entire costs of the arbitration proceeding - $5,250 - against Charles Schwab.

The Schwab YieldPlus Funds are considered ultra-short bond funds - products that at one time were deemed a more conservative, relatively low-risk investment. That theory changed, however, when a new mix of untested and highly speculative financial products became available on Wall Street, the result of which has caused billions of dollars in financial losses for investors.

“Although Charles Schwab recommended the purchase of the Schwab YieldPlus Fund Select Shares (SWYSX) and the Schwab YieldPlus Investor Shares (SWYPX) as safe, conservative cash alternatives to investors, the evidence presented in this case clearly establishes that the funds were over concentrated in high risk, speculative mortgage-backed securities,” said the Kellys’ attorney Thomas A. Hargett of Maddox Hargett & Caruso, P.C.

Specifically, the Kellys’ claim charges Charles Schwab of marketing the Schwab YieldPlus Funds as a safe investment alternative to money market funds with higher potential returns and only marginally higher risks. In reality, the funds were weighted down by high concentrations of toxic subprime-related assets.

From June 2007 through June 2008, investors in the YieldPlus Funds lost 31.7%, while other ultra short bond funds experienced little or no losses.

FINRA continues to review hundreds of arbitration claims filed by investors who have lost money in the Schwab YieldPlus Funds.

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.