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Schwab YieldPlus Funds

Charles Schwab

Charles Schwab & Company is one of the largest online and discount brokerage firms in the United States. In 2007, following the collapse of the subprime mortgage market, Schwab and various members of its management team became the focus of accusations from investors and securities regulators over massive financial losses that occurred in two ultra-short bond funds known as the Schwab YieldPlus Funds.

Schwab YieldPlus Funds

Created in 1999, the Schwab YieldPlus Select Fund (SWYSX) and SchwabYield Plus Fund (SWYPX) were marketed as a higher yielding, conservative alternative to money market funds. Investors later learned the funds were heavily exposed to subprime-backed mortgage securities. Ultimately, this over concentration in high risk, speculative investments caused investors to sustain billions of dollars in losses.

At one time, the Schwab YieldPlus Fund was a $14 billion fund. By the end of July 2008, the fund had approximately $500 million in assets, down from $6.5 billion just six months earlier. Today, the Schwab YieldPlus Fund is considered one of the worst performing ultra-short bond funds on record.

Investors have appealed to the Financial Industry Regulatory Authority (FINRA), filing arbitration claims against Charles Schwab & Co. and YieldPlus managers for misrepresenting the asset makeup of the funds and their failure to disclose information about the funds' high concentration of subprime holdings. In October 2008, FINRA awarded more than $500,000 to an investor as a result of his losses in the YieldPlus Fund.

In 2009, FINRA is expected to review hundreds of additional claims from investors who lost money in the Schwab Yield Plus funds.

Maddox Hargett & Caruso, P.C. is involved in numerous arbitration proceedings and securities lawsuits to recover investment losses related to Charles Schwab products and, specifically, the Schwab YieldPlus Funds. If you are an individual or institutional investor and have concerns or questions about your Schwab investments, contact Mark Maddox. We can evaluate your situation to determine if you have a claim.

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