Bloomberg is reporting that Charles Schwab Corp., the largest U.S. online brokerage, may set aside $260 million to settle investors’ claims regarding losses from their Yield Plus mutual fund. To date, eight different class actions have been filed against Charles Schwab relating to their Yield Plus fund.
There are a number of problems with this rumored settlement. The first is that a Schwab spokesman has commented that it is “inappropriate and misguided” at this early stage to speculate regarding settlement. Secondly, the Bloomberg report only addresses the class actions that have been filed. A number of investors, seeking better outcomes, are choosing to participate in their own individual arbitrations.
Charles Schwab is accused of misleading investors by marketing, offering and selling its Yield Plus fund as only “marginally” riskier than cash. From July 1 through April 30, investors in this fund lost $1.3 billion.
According to Bloomberg, securities class action settlements typically begin around 1% of investors’ losses. The $260 million figure being reported represents 20 percent of losses. Our firm believes that investors may stand a better chance of recieving a greater recovery of their losses through individual arbitration actions.
Investors of the Charles Schwab Yield Plus mutual fund are encouraged to contact an attorney to discuss their options.