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Charles Schwab might have pitched to customers as a conservative cash alternative the Schwab YieldPlus Funds Investor Shares and Schwab YieldPlus Funds Select Shares (SWYPX). In fact Charles Schwab wrongly concentrate mortgage related assets in those funds causing severe losses.
Investigation Source (Case #08-cv-01510)
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Misrepresentation
- Investments
- Unsuitable Investments
- Investment Advisor Duties
Product or Service
- Mutual Funds
Injury Type
- Monetary Loss
Investigation Details
Investigation and pending class action lawsuit against Charles Schwab Corporation, alleging that Schwab deceived investors about the underlying risk in its Schwab YieldPlus Funds Investor Shares (SWYSX) and Schwab YieldPlus Funds Select Shares (SWYPX).
The class action lawsuit claims Charles Schwab and the funds' underwriter deceived investors about the underlying risk in the funds, which were sold as cash alternatives and as a stable, ultra-short bond fund that was a safe alternative to cash and had a minimal risk of fluctuating share price. In fact, the funds invested in highly speculative and risky mortgage-related structured debt, according to the class action complaint.
The class action complaint also states that the funds' registration statements failed to include required facts about the investments - specifically that the funds have a high vulnerability of suddenly becoming illiquid and that the net asset values were highly speculative and inflated.
The class action lawsuit claims Charles Schwab and the funds' underwriter deceived investors about the underlying risk in the funds, which were sold as cash alternatives and as a stable, ultra-short bond fund that was a safe alternative to cash and had a minimal risk of fluctuating share price. In fact, the funds invested in highly speculative and risky mortgage-related structured debt, according to the class action complaint.
The class action complaint also states that the funds' registration statements failed to include required facts about the investments - specifically that the funds have a high vulnerability of suddenly becoming illiquid and that the net asset values were highly speculative and inflated.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| Charles Schwab Corporation, The (SCHW) | The Charles Schwab Corporation provides securities brokerage, banking, and related financial services to individual, institutional, and corporate clients. |