SEC Warns of Charles Schwab Bond Fund Lawsuit Over Securities Violations

|
AboutLawsuits

Add Your Comments

The U.S. Securities and Exchange Commission (SEC) has warned Charles Schwab Corp. that it could face a regulatory lawsuit over its handling of the Schwab YieldPlus Fund and Schwab Total Bond Market Fund, for which the company already faces pending securities fraud arbitration claims and an investor class action lawsuit for misleading investors.

Charles Schwab Corp. acknowledged last week that they received an SEC “Wells notice”, which indicates the regulators plan to recommend the company and the funds’ president be brought up on civil charges.

A number of arbitration claims over the funds and a Schwab YieldPlus class action lawsuit are already pending, after the funds lost much of their value when the sub-prime mortgage market crashed in late 2007, leaving investors with substantial losses. The investor claims allege that Schwab misled investors and failed to properly disclose the nature of the risks associated with certain securities held by the bond funds.

Do You Know about…

Spinal Cord Stimulator lawsuits

Spinal cord stimulator lawsuits are being investigated for individuals who suffered unnecessary shocks, burns or other problems, often resulting in the need for additional surgery to remove the SCS.

Learn More
SEE IF YOU QUALIFY FOR COMPENSATION
Spinal-Cord-Stimulation-Lawsuit
Spinal-Cord-Stimulation-Lawsuit

Do You Know About…

Spinal Cord Stimulator lawsuits

Spinal cord stimulator lawsuits are being investigated for individuals who suffered unnecessary shocks, burns or other problems, often resulting in the need for additional surgery to remove the SCS.

Learn More
SEE IF YOU QUALIFY FOR COMPENSATION

The Schwab YieldPlus funds are ultra-short bond funds that were heavily promoted as conservative investment alternatives to money market funds or cash. Despite being advertised to generate income with minimal changes in share price, the fund lost more than 30% of its value between June 2007 and June 2008 due to heavy investments in risky subprime mortgage securities, which some experts indicate violated the prospectus.

Although the SEC notice is not a formal charge of wrongdoing, nor is it a finding of guilt, the civil charges could increase the likely hood of a Schwab YieldPlus settlement for investors who are pursuing arbitration or class action claims, according to a report by Investment News. The company has already lost a number of arbitration cases through the Financial Industry Regulatory Authority (FINRA), resulting in losses of more than $20 million so far.

Charles Schwab Corp. indicates that they plan to respond to the SEC “Wells notice” over the Schwab YieldPlus Fund and Schwab Total Bond Market Fund to explain why they believe the civil lawsuit and enforcement charges are not appropriate.

Tags: Arbitration, Bond Fund, Charles Schwab, Schwab, Schwab YieldPlus, Securities Fraud
Image Credit: |

More Lawsuit Stories

0 Comments

This field is for validation purposes and should be left unchanged.

Share Your Comments

This field is hidden when viewing the form
I authorize the above comments be posted on this page
Post Comment
Weekly Digest Opt-In

Want your comments reviewed by a lawyer?

To have an attorney review your comments and contact you about a potential case, provide your contact information below. This will not be published.

NOTE: Providing information for review by an attorney does not form an attorney-client relationship.

MORE TOP STORIES

Depo-Provera Meningioma Lawyers Reappointed to MDL Leadership Roles
A group of about 70 Depo-Provera meningioma lawyers have been reappointed to key leadership roles in the litigation, as thousands of women seek compensation for brain tumors they say were caused by the birth control shots.
Abbott Proclaim SCS Lawsuit Alleges Stimulator Lead Migration Resulted in Multiple Surgeries
Abbott Laboratories faces a lawsuit from a North Carolina woman who says sales representatives repeatedly tried to reprogram a spinal cord stimulator that had already failed due to other problems.
Hair Relaxer Endometrial Cancer Lawsuits and Ovarian Cancer Lawsuit Proposed for Early Trials
Attorneys involved in hair relaxer lawsuits have selected two groups of claims they say should be chosen to represent thousands of similar cancer claims.