Napoli Bern Ripka, LLP Blog

The Wall Street Journal is reporting that Charles Schwab is attempting to offer only pennies on the dollar to settle with investors who lost money as a result of their investment in the Charles Schwab Yield Plus bond fund. The law firm of Napoli Bern Ripka LLP is pursuing financial fraud claims on behalf of individuals who suffered losses due to the fund’s heavy investment in mortgage-related/backed securities.  In fact, many of the clients our firm represents have received small offers from Charles Schwab.  The minimal amount of the Charles Schwab settlement offers reinforces the importance for investors to have legal representation to assure proper reimbursement for losses sustained.

According to our clients, the Charles Schwab Yield Plus settlement offers have ranged from only 1 cent to 14 cents for each dollar lost as a result of the securities misrepresentation.  Charles Schwab Yield Plus losses may be recoverable.  The Charles Schwab Yield Plus is an ultra-short bond fund that was advertised as an alternative to money market funds for conservative investors looking for a slightly higher yield while preserving capital.  Although investors were told, through their brokers, that the fund’s goal was to have minimal changes in the share price, the fund has dropped more than 25% over the first four months of 2008!

The dramatic losses suffered by Schwab Yield Plus investors were directly tied to unreasonably heavy holdings involving mortgage-backed securities, particularly those involving subprime loans.  For a conservative investment fund, Charles Schwab failed to adequately disclose the true nature of the risk they were exposing people to by investing in these newer securities, which had not been tested through market cycles.