Investigation and pending class action against Charles Scwab on behalf of investors who purchased Select Shares or Investor Shares of the Charles Schwab YieldPlus Fund.
Charles Schwab marketed to its customers the Charles Schwab YieldPlus Fund as a conservative investment and was pitched to investors as being only marginally more risky than a money market fund. The Charles Schwab YieldPlus Fund purported to deliver a high return by investing in ultra-short term bonds. The Charles Schwab YieldPlus Fund was sold to investors pursuant to a Prospectus, filed with the SEC, which promised that the Charles Schwab YieldPlus Fund would avoid risk by not investing in illiquid instruments or by concentrating its investments in any one industry.
In direct violation of the representations to investors, Charles Schwab invested the Charles Schwab YieldPlus Fund assets in high risk mortgage-backed instruments, including securities backed by subprime loans. Contrary to its promises of diversification, the Charles Schwab YieldPlus Fund concentrated half of its assets in investments tied to mortgages. Moreover, approximately 40% of the Charles Schwab YieldPlus Fund's assets were locked into complex instruments such as Collateralized Mortgage Obligations and Collateralized Debt Obligations that were not liquid, and which Charles Schwab YieldPlus Fund could not readily sell.
When the U.S. mortgage market collapsed, the Charles Schwab YieldPlus Fund's investments in these risky instruments plummeted in value. By March 20, 2008, the Charles Schwab YieldPlus Fund's assets had declined to approximately $2.5 billion from a high of over $13.0 billion as of May 30, 2007.
Name (Stock Symbol)
Charles Schwab Corporation, The (SCHW)
The Charles Schwab Corporation provides securities brokerage, banking, and related financial services to individual, institutional, and corporate clients.
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