Schwab Agreed to Pay Millions In a Fund Settlement

Charles Schwab Corp. has agreed to pay $200 million to aggrieved investors who claimed the company had deceived them. Afther the terms of the settlement was released, shares rose as investors had feared the final settlement costs would be much higher. It is also paying the $200 million because it the corporation has misled investors on the amount of mortgage-backed securities held by its Schwab Yield-Plus Fund. The company agreed to repay customers in its Yield-Plus Fund which the plaintiffs said deceived them about the nature of short-term investments that lost them a lot of money when the credit crisis struck.

Schwab agreed to settle the claims filed in 2008 by paying the $200 million to Plaintiffs. The lawsuit alleged that Schwab incorrectly described the fund, once the world’s largest short-term bond fund, as "safe". There was a trial that was set for this month. William H. Alsup, U.S. District Judge, has denied Schwab’s bid to dismiss the case earlier this year. Steve Berman, a lawyer with Seattle-based Hagens Berman Sobol Shapiro, represented the investors.