Investors Seek Arbitration Resolutions Against Charles Schwab for Alleged Securities Violations

Charles Schwab & Co. has recently been barraged with FINRA arbitration claims filed by investors alleging that the firm violated industry regulations and state securities laws. In their complaints, investors are accusing Charles Schwab of misleading them about the risks associated with certain mutual funds, including the degree to which the funds were exposed to the hazards of the sub-prime mortgage market. They say that rather than diversify the investments, the brokerage firm over-concentrated them in securities tied to the mortgage industry.

The claims cite numerous omissions and misrepresentations in mutual funds that the brokerage firm had underwritten, including those involving Schwab YieldPlus Funds Investor Shares (SWYPX) and the Schwab YieldPlus Fund Select Shares (SWYSX). The funds have undergone major losses recently, and investors claim these losses were not brought about by market events, but, rather, due to mismanagement by Schwab fund managers, including its failure to disclose key information to investors.

Investors say that in addition to Schwab’s alleged failure to diversify its fund assets, the brokerage firm also failed to reveal that Schwab’s leading broker-dealers issued most of the bonds that the funds held, there was no primary market for the majority of the bonds, and the firm’s credit and market analyst did not have the experience to evaluate the value and risk of mortgage backed securities.

Shepherd Smith Edwards & Kantas LTD LLP represents many of these investors, and we have helped thousands of people that have been the victim of broker-dealer misconduct across the United States recoup their losses. Contact Shepherd Smith Edwards & Kantas LTD LLP to schedule your free consultation.

Related Web Resources:

Shepherd Smith Edwards & Kantas LTD LLP Files $700,000 Arbitration Claim Regarding Schwab California Tax-Free YieldPlus Fund,, June 24, 2008
Charles Schwab & Co.