Corporate & Securities Law

The SEC recently announced that it had settled with Charles Schwab Investment Management and Charles Schwab & Co., Inc. with making misleading statements regarding the Charles Schwab YieldPlus Fund and for failing to establish proper policies to prevent the misuse of material, non-public information.  Schwab agreed to pay more than $118 Million to settle these claims.  The SEC seeks to have these payments placed in a Fair Fund for distribution to harmed investors, which is subject to approval by the U.S. District Court for the Northern District of California. 

The Schwab YieldPlus Fund, which at its peak had $13.5 billion in assets and more than 200,000 accounts, was marketed as a cash alternative with only slightly more risk than a money market fund, even though at one point half of the fund?s assets were invested in private issuer and mortgage back securities with maturities and credit quality significantly different than investments made by money market funds. 

The SEC alleged that Schwab failed to adequately firm investors about the risks of the fund, and that investors were mislead by claims that YieldPlus Fund was only slightly more risky than a traditional money market fund.  During the credit-crisis of 2007, when the YieldPlus Fund?s Net Asset Value began to decline, many investors redeemed their holdings forcing the fund to sell assets in a depressed market to raise cash.  This caused significant price erosion in the fund, and consequently losses to investors who thought they were purchasing a cash alternative. 

A Fair Fund is a fund established by the SEC to help distribute illicit profits and penalties to investors who were victims of a financial or securities fraud.  Investors who are eligible to submit a claim with the Fair Fund typically must complete and submit a claim form to the Fair Fund in order to receive a distribution. 

Eccleston Law Offices, P.C. represents individual and institutional investors in securities disputes nationwide.  We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors. Our attorneys also help victims of securities fraud pursue recovery through the submission of claims with SEC created Fair Funds.

If you are an investor who has suffered significant losses in the Charles Schwab YieldPlus Fund, your losses may be recoverable through securities arbitration.  Those who invested in the YieldPlus fund may also be eligible to submit a claim with the YieldPlus Fair Fund once it is created.   Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 for more information.