SOURCE: David P. Meyer & Associates, Co., LPA

December 03, 2009 16:45 ET

Charles Schwab Found Liable in FINRA Arbitration, According to David P. Meyer & Associates Co., L.P.A.

COLUMBUS, OH--(Marketwire - December 3, 2009) - Charles Schwab (SCHW) was found liable by a New York arbitration panel of the Financial Industry Regulatory Authority (FINRA) in connection to a Midwestern retiree's investment losses in the Schwab YieldPlus Funds. FINRA awarded the investor 100 percent of the money lost from his investments in the Schwab YieldPlus Funds -- $23,633, plus interest. Significantly, the arbitration panel refused to give Charles Schwab credit for the dividends that the investor earned on the Schwab YieldPlus Funds, which were then re-invested in the same Funds and led to further losses.

In addition, the arbitration panel assessed the entire cost of the arbitration proceeding against Charles Schwab.

"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 shows that the funds were over concentrated in high risk, speculative mortgage-backed securities," said the investor's attorney, Marnie Lambert of David P. Meyer & Associates Co., L.P.A.

"The evidence demonstrated that Charles Schwab misrepresented the risks of the YieldPlus Fund and failed to disclose important information about the securities held in the funds," added Lambert.

The claim against Charles Schwab included the following as alleged causes of action: breach of written contract, breach of fiduciary duty, constructive fraud, fraud by misrepresentation and omission, negligence, negligent supervision, and violations of the Iowa Uniform Securities Act.

According to the investor's claim, Charles Schwab marketed the Schwab YieldPlus Funds as safe investment alternatives to money market funds with higher potential returns and only marginally higher risks. In reality, the Schwab YieldPlus Funds were over concentrated in private label mortgage-backed securities and exposed investors to a substantial risk of loss of principal.

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.

Opt-Out Deadline Approaching

In August, a federal court certified a Charles Schwab YieldPlus lawsuit involving the Schwab YieldPlus Fund Select Shares and the Schwab YieldPlus Investor Shares as a class-action lawsuit. Schwab YieldPlus Fund investors who are included in the class action now have less than 30 days to decide whether to remain in the class action lawsuit and be bound by its results or formally request exclusion (i.e. "opt out") if they intend to pursue an individual arbitration claim with FINRA.

The deadline for investors to submit opt-out requests is Monday, Dec. 28, 2009. After that date, investors can no longer request exclusion.

"For some YieldPlus investors, class action representation can be an attractive legal option if individual financial losses are small. In those instances, it's possible investors may not have an economic interest in pursuing the case on their own. However, for investors who sustained significant losses, filing an individual arbitration claim with FINRA may prove to be a better legal avenue in terms of recovering their losses," Lambert explains.

For more information about opting out of the Charles Schwab YieldPlus class action lawsuit, please contact us at 866-827-6537.

In 2007, the law firm of David P. Meyer & Associates Co., L.P.A. joined an association of three other law firms to assist investors who suffered financial losses in the Schwab YieldPlus Funds and other subprime mortgage-related investments. The law firms include: Maddox, Hargett & Caruso, P.C. of Indianapolis and New York Ciry, Aidikoff, Uhl & Bakhtiari of Beverly Hills, California; and Page Perry, LLC, of Atlanta, Georgia.

The brokers who sold the Schwab YieldPlus Funds are not targets of investor claims, according to the investors' legal teams.

More information is available at or by contacting an attorney below.

Contact Information

    David P. Meyer & Associates Co., L.P.A
    Columbus, Ohio
    Marnie Lambert
    (866) 827-6537
    Email Contact

    Maddox, Hargett & Caruso, P.C.
    Indianapolis, Indiana; New York, New York
    Thomas A. Hargett
    (800) 505-5515
    Email Contact

    Aidikoff, Uhl & Bakhtiari
    Beverly Hills, California
    Ryan K. Bakhtiari
    (800) 382-7969
    Email Contact

    Page Perry, LLC
    Atlanta, Georgia
    J. Boyd Page
    (877) 673-0047
    Email Contact