>Schwab - YieldPlus Funds
Date Filed: March 18, 2008
Court: U.S. District Court
Location: California
Ticker Symbol: SCHW
Notice to class members: The settlement in this case is now final. Checks to class members will be mailed by July 1, 2011.
Hagens Berman Sobol Shapiro filed the first class-action lawsuit against Charles Schwab Corporation (NASDAQ:SCHW) on March 18, 2008, alleging that Schwab deceived investors about the underlying risk in its Schwab YieldPlus Funds Investor Shares (SWYPX) and Schwab YieldPlus Funds Select Shares (SWYSX).
The lawsuit claimed Charles Schwab and the funds' underwriter deceived investors about the underlying risk in the funds, which were sold as cash alternatives, but were in fact highly speculative and risky mortgage-related structured debt, according to the complaint.
The complaint also stated that the funds' registration statements failed to include required facts about the investments - specifically that the funds have a high vulnerability of suddenly becoming illiquid and that the net asset values were highly speculative and inflated.
Since HBSS filed the first suit, many other firms filed similar class actions, and these were consolidated by the Federal Court in the United States District Court for the Northern District of California.
On July 3, 2008, the Honorable William H. Alsup appointed five members of the YieldPlus Investor Group to the position of lead plaintiff and instructed them to interview and choose lead counsel. On August 14, 2008, the YieldPlus Investor Group submitted their decision to the court to retain Hagens Berman Sobol Shapiro LLP. On August 18, 2008, the Court approved that decision.
To participate in this lawsuit as a member of the class, investors do not need to take any action at this time.
RECENT DEVELOPMENTS:
April 19, 2011 - Judge Alsup gave final approval to the $235 million settlement.
Nov. 18, 2010 - Steve Berman, Managing Partner of Hagens Berman and lead counsel in the Schwab YieldPlus Litigation reached an agreement in principle with the defendant to allow the Schwab YieldPlus settlement to move forward, pending the court’s final approval.
The agreement preserves the $235 million settlement for the vast majority of investors who saw it was a fair conclusion to the litigation, while preserving the rights of those who want to proceed with individual claims.
Click here to read a formal statement from Berman.
Nov. 8, 2010 - Charles Schwab Corp. announced today that it is pulling out of a $235 million settlement in class-action litigation that claimed the brokerage company misled investors about the risks associated with its YieldPlus bond fund.
July 26, 2010 – Hagens Berman filed a series of motions with the court in support of the final approval settlement.
April 20, 2010 - The Charles Schwab Corporation agreed to settle with plaintiffs represented by Hagens Berman in a civil class-action lawsuit related to the Schwab YieldPlus Fund. The settlement would pay plaintiffs' a total of $200 million to resolve claims if approved by the court. The preliminary settlement is subject to a definitive agreement and final approval of the court.
.Steve Berman, managing partner of Hagens Berman, said in response to the settlement, "We're pleased with the proposed settlement and believe it is eminently fair to the class members. We look forward to the court's review and approval."
April 8, 2010 - Judge William Alsup today refused to grant Schwab's motion for a summary judgment in the remaining two causes of action against the investment giant, clearing the way for a May 10th trial. The judge earlier granted the plaintiff's motion for a summary judgment for a class of California plaintiffs, leaving only the amount of damages for that class yet to be determined.
March 31, 2010 - A U.S. District Court yesterday ruled that Charles Schwab Corp. engaged in unlawful conduct when the company loaded its popular YieldPlus Mutual Fund with high-risk mortgage-related structured debt without shareholder approval.
Judge William Alsup granted plaintiff's motion for summary judgment, which could allow one of three classes to recover damages as high as $140 million in a proceeding to be held later. Questions surrounding the two larger classes remain, and the case is set for trial on May 10, 2010 if the court allows those claims to proceed. Damages for that class could exceed $650 million.
Feb. 17, 2010 - Discovery has been completed. Summary judgment motions have been filed by all parties, and the Court will hold a hearing on those motions on March 25, 2010. Trial is currently scheduled for May 10, 2010, though that day may change depending on the Court's schedule.
August 21, 2009 - Today Judge William Alsup granted our motion for class certification, certifying two classes under federal claims and a third state-specific class.
The first federal class includes all individuals and entities who acquired shares of the fund from Nov. 15, 2006, through March 17, 2008. The second federal class consists of all individuals and entities who acquired shares of the fund from May 31, 2006, through March 17, 2008.
A single state class was also certified, that consists of California resident investors who held shares in the fund on Sept. 1, 2006.
The judge partially granted our motion, dismissing claims against Kimon Daifotis, who acted as senior portfolio manager at Schwab Investments with overall responsibility for management of the fund.
We'll continue to update our Web site with case developments. In the next month, we'll have details here on form of notice and next steps for class members.
July 13, 2009 - - Plaintiffs are due to file an expert report relating to their request for class certification on July 17, 2009. Fact Discovery will close on November 27, 2009 and Expert Discovery closes on January 4, 2010. Trial is currently set for May 10, 2010.
February 5, 2009 - This week Judge Alsup ruled on the defendants' motion to dismiss denying most of the claims. This is a significant victory for plaintiffs and allows us to continue moving the case forward.
In the next couple of weeks, we'll begin working on initial discovery disclosures and an amended complaint. You can check the Web site February 26, 2009, to review updated court documents. We'll continue posting updates here as the case progresses.
October 2, 2008 - Today Hagens Berman Sobol Shapiro filed an amended complaint in the case against Charles Schwab. The complaint seeks to certify two distinct classes for litigation moving forward - the Securities Class and State Law Class.
The general allegations from the original complaint remain the same. Plaintiffs allege the named defendants violated federal and state law in marketing and selling the Fund as a stable, ultra-short bond fund that was a safe alternative to cash and had a minimal risk of fluctuating share price.
Dec. 1, 2008 - Defendants filed three motions to dismiss and a motion to strike. Lead plaintiffs opposed these motions on Nov. 26, 2008 and a hearing is currently scheduled for Jan. 8, 2009.
Court: U.S. District Court
Location: California
Ticker Symbol: SCHW
Notice to class members: The settlement in this case is now final. Checks to class members will be mailed by July 1, 2011.
Hagens Berman Sobol Shapiro filed the first class-action lawsuit against Charles Schwab Corporation (NASDAQ:SCHW) on March 18, 2008, alleging that Schwab deceived investors about the underlying risk in its Schwab YieldPlus Funds Investor Shares (SWYPX) and Schwab YieldPlus Funds Select Shares (SWYSX).
The lawsuit claimed Charles Schwab and the funds' underwriter deceived investors about the underlying risk in the funds, which were sold as cash alternatives, but were in fact highly speculative and risky mortgage-related structured debt, according to the complaint.
The complaint also stated that the funds' registration statements failed to include required facts about the investments - specifically that the funds have a high vulnerability of suddenly becoming illiquid and that the net asset values were highly speculative and inflated.
Since HBSS filed the first suit, many other firms filed similar class actions, and these were consolidated by the Federal Court in the United States District Court for the Northern District of California.
On July 3, 2008, the Honorable William H. Alsup appointed five members of the YieldPlus Investor Group to the position of lead plaintiff and instructed them to interview and choose lead counsel. On August 14, 2008, the YieldPlus Investor Group submitted their decision to the court to retain Hagens Berman Sobol Shapiro LLP. On August 18, 2008, the Court approved that decision.
To participate in this lawsuit as a member of the class, investors do not need to take any action at this time.
RECENT DEVELOPMENTS:
April 19, 2011 - Judge Alsup gave final approval to the $235 million settlement.
Nov. 18, 2010 - Steve Berman, Managing Partner of Hagens Berman and lead counsel in the Schwab YieldPlus Litigation reached an agreement in principle with the defendant to allow the Schwab YieldPlus settlement to move forward, pending the court’s final approval.
The agreement preserves the $235 million settlement for the vast majority of investors who saw it was a fair conclusion to the litigation, while preserving the rights of those who want to proceed with individual claims.
Click here to read a formal statement from Berman.
Nov. 8, 2010 - Charles Schwab Corp. announced today that it is pulling out of a $235 million settlement in class-action litigation that claimed the brokerage company misled investors about the risks associated with its YieldPlus bond fund.
"Hagens Berman Managing Partner Steve Berman issued the following statement regarding Schwab’s decision:
"We were surprised by the announcement by Schwab that they are attempting to renege on the settlement agreement we reached on behalf of class members in the YieldPlus case.
"We were also very surprised at Schwab’s rationalization for its move; that since there were plaintiffs with claims outside the scope of the claims the class could bring action under California law, Schwab could kill the agreement the company made with the class members. Schwab’s logic in reaching this conclusion is curious at best.
"Schwab hired one of the nation’s premier law firms, which negotiated and signed the settlement documents. Schwab’s in-house lawyers were involved every step of the way. Those documents clearly stated that the claims outside the class action were not released by the agreement.
Schwab and their counsel are a sophisticated group. They knew what they were doing – or should have. The notion that they can walk away from the agreement because they now realize they won’t get complete amnesty is farfetched.
"We do not intend to give back a dime of the settlement money Schwab has deposited on behalf of the class members, and we intend to ask the court to hold Schwab in contempt for their effort to rewrite a deal they negotiated and signed.
"Since we just received their motion hours ago without any prior notice, we cannot say more than that."July 26, 2010 – Hagens Berman filed a series of motions with the court in support of the final approval settlement.
April 20, 2010 - The Charles Schwab Corporation agreed to settle with plaintiffs represented by Hagens Berman in a civil class-action lawsuit related to the Schwab YieldPlus Fund. The settlement would pay plaintiffs' a total of $200 million to resolve claims if approved by the court. The preliminary settlement is subject to a definitive agreement and final approval of the court.
.Steve Berman, managing partner of Hagens Berman, said in response to the settlement, "We're pleased with the proposed settlement and believe it is eminently fair to the class members. We look forward to the court's review and approval."
April 8, 2010 - Judge William Alsup today refused to grant Schwab's motion for a summary judgment in the remaining two causes of action against the investment giant, clearing the way for a May 10th trial. The judge earlier granted the plaintiff's motion for a summary judgment for a class of California plaintiffs, leaving only the amount of damages for that class yet to be determined.
March 31, 2010 - A U.S. District Court yesterday ruled that Charles Schwab Corp. engaged in unlawful conduct when the company loaded its popular YieldPlus Mutual Fund with high-risk mortgage-related structured debt without shareholder approval.
Judge William Alsup granted plaintiff's motion for summary judgment, which could allow one of three classes to recover damages as high as $140 million in a proceeding to be held later. Questions surrounding the two larger classes remain, and the case is set for trial on May 10, 2010 if the court allows those claims to proceed. Damages for that class could exceed $650 million.
Feb. 17, 2010 - Discovery has been completed. Summary judgment motions have been filed by all parties, and the Court will hold a hearing on those motions on March 25, 2010. Trial is currently scheduled for May 10, 2010, though that day may change depending on the Court's schedule.
August 21, 2009 - Today Judge William Alsup granted our motion for class certification, certifying two classes under federal claims and a third state-specific class.
The first federal class includes all individuals and entities who acquired shares of the fund from Nov. 15, 2006, through March 17, 2008. The second federal class consists of all individuals and entities who acquired shares of the fund from May 31, 2006, through March 17, 2008.
A single state class was also certified, that consists of California resident investors who held shares in the fund on Sept. 1, 2006.
The judge partially granted our motion, dismissing claims against Kimon Daifotis, who acted as senior portfolio manager at Schwab Investments with overall responsibility for management of the fund.
We'll continue to update our Web site with case developments. In the next month, we'll have details here on form of notice and next steps for class members.
July 13, 2009 - - Plaintiffs are due to file an expert report relating to their request for class certification on July 17, 2009. Fact Discovery will close on November 27, 2009 and Expert Discovery closes on January 4, 2010. Trial is currently set for May 10, 2010.
February 5, 2009 - This week Judge Alsup ruled on the defendants' motion to dismiss denying most of the claims. This is a significant victory for plaintiffs and allows us to continue moving the case forward.
In the next couple of weeks, we'll begin working on initial discovery disclosures and an amended complaint. You can check the Web site February 26, 2009, to review updated court documents. We'll continue posting updates here as the case progresses.
October 2, 2008 - Today Hagens Berman Sobol Shapiro filed an amended complaint in the case against Charles Schwab. The complaint seeks to certify two distinct classes for litigation moving forward - the Securities Class and State Law Class.
The general allegations from the original complaint remain the same. Plaintiffs allege the named defendants violated federal and state law in marketing and selling the Fund as a stable, ultra-short bond fund that was a safe alternative to cash and had a minimal risk of fluctuating share price.
Dec. 1, 2008 - Defendants filed three motions to dismiss and a motion to strike. Lead plaintiffs opposed these motions on Nov. 26, 2008 and a hearing is currently scheduled for Jan. 8, 2009.
Key Attorneys
Sean R. Matt
Mr. Matt is a partner at Hagens Berman Sobol Shapiro, where he has worked since its founding in 1993. Mr. M... link >>
Mr. Matt is a partner at Hagens Berman Sobol Shapiro, where he has worked since its founding in 1993. Mr. M... link >>
Steve W. Berman
Mr. Berman co-founded the firm in 1993, and is the managing partner. He is considered one of the most succe... link >>
Mr. Berman co-founded the firm in 1993, and is the managing partner. He is considered one of the most succe... link >>
Reed R. Kathrein
Mr. Kathrein is the managing partner of the Berkeley office of Hagens Berman. After eleven years defending ... link >>
Mr. Kathrein is the managing partner of the Berkeley office of Hagens Berman. After eleven years defending ... link >>
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