Stock Broker Fraud

Sonn & Erez Hired by Investors To Sue Charles Schwab Over Its YieldPlus Funds — SCHW, SWYSX, SWYPX
May 8, 2008- Sonn & Erez has been retained by investors to sue Charles Schwab over the misrepresentations in marketing their YieldPlus Funds, which have lost as much as 80% in the past year due to reckless investments in mortgage backed securities. Many investors were seeking the safety of CDs or moneymarkets, and were steered into the YildPlus Funds without proper disclosure.
A class-action lawsuit filed by stockholders against investment giant Charles Schwab (Nasdaq:SCHW) concerning its YieldPlus Funds Investor Shares (Nasdaq:SWYSX) and YieldPlus Funds Select Shares (Nasdaq:SWYPX) is sparking dramatic reactions from investors, according to the law firm which filed the suit.
The range of investors who are complaining includes investment advisors and retirees. Money managers and registered investment advisors who followed Schwab’s advice are also upset as their clients are inquiring whether they can join or have losses large enough to be the lead plaintiff.
The common complaint was Schwab’s representation that the YieldPlus funds were a safe alternative to cash, CDs and money market funds, which appears to be false.
The lawsuit, filed March 18, 2008 in U.S. District Court in Northern California, alleges Schwab omitted important information from the funds’ SEC Registration Statement, Prospectus and selling representation, including how heavily the funds were exposed to sub-prime mortgage risks. The lawsuit claims more than 50 percent of the funds’ assets are invested in the risky mortgage industry — a percentage that grew as the company abandoned the original objectives of the funds in pursuit of higher yields.
Charles Schwab advertised the YieldPlus funds as ultra-short bond funds that serve as a higher-yielding alternative to money-market funds and offered low risk to investors. Charles Schwab also claimed to offer “investments in a large, well-diversified portfolio,” the class action complaint states.
Attorneys at Sonn & Erez believes investors will fare better in arbitration claims than in the class action, said Jeff Sonn, Esq., managing partner at Sonn & Erez PLC. The only offers we have heard that have come from Schwab since the filing of the lawsuit was about 5% of the client’s losses, so it appears that lawsuit has not had the effect that class action lawyers were hoping for,” said Sonn. “We think customers should sue Schwab in arbitration, which should be completed in about 16 months, rather than join the class action, which could take years.”
Investors in a Schwab YieldPlus fund may be eligible to file arbitration claims to recover their losses. Investors should contact Jeff Sonn, Esq. at 1-8… or jsonn@sonnerez.com for more information. Sonn & Erez, PLC is an AV-Rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. For 20 years, lawyers at Sonn & Erez has represented investors against the major Wall Street brokerage firms in claims involving stocks, options, auction rate securities, variable annuities, hedge funds, mutual funds, bonds, and collateralized mortgage obligations (CMOs).