Ft. Lauderdale, Fl. -The Securities Law Firm of Mark A. Tepper, P.A. has filed another individual claim against Charles Schwab (NASDAQ: SCHW), alleging the discount brokerage firm, “trained its registered representatives to sell YieldPlus, to Claimants and others, as ‘a smart alternative for your cash.’
“However, unlike cash and money market funds, YieldPlus’ portfolio held large positions in long term securities which exposed the portfolio to substantial market risk,” the claim alleges.
The claim, filed with the Financial Industry Regulatory Authority (FINRA), on behalf of a Maryland couple, alleges that Schwab “did not adequately disclose the market risks.”
“Schwab misled Claimants and other customers about a crucial aspect of the YieldPlus fund’s investments – the maturity date. At YieldPlus, the investment’s maturity was not, as Schwab had previously stated, the date the investment was scheduled to mature. Instead, an investment that would mature in 20 years, but whose interest rate was reset every month, was falsely reported as a one-month maturity,” the claim alleges.
“YieldPlus posted steep losses in 2007-2008, during the financial collapse, because more than half its portfolio holdings were mortgage backed and asset backed securities,” the claim contends.
The claim alleges that Schwab encouraged retail customers like the claimants, to hold onto their YieldPlus shares and that, “In contrast, Schwab was liquidating YieldPlus from its other mutual funds, as well as its funds operated for the benefit of Schwab senior management.”
“Its liquidation of YieldPlus for its executives clearly shows Schwab putting its own financial interests ahead of Claimant’s. Schwab was selling its YieldPlus to get out before the inevitable YieldPlus crash, leaving Claimants and others to suffer the losses,” the claim contends.
About Mark A. Tepper, P.A. (www.MarkTepper.com)
A former Chief Trial Counsel at the Bureau of Investor Protection and Securities, Attorney Mark Tepper has earned the reputation of “Investor Advocate” while practicing law for over 35 years and representing the individual investor. A member of the Florida, New York and California Bars, Mr. Tepper is AV®-rated, the highest rating of lawyers in the Martindale-Hubbell Law Directory.
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