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Recovery of Schwab Yield Plus Losses: Securities Arbitration vs. Class Action

Before retaining an attorney, aggrieved investors should consider carefully whether their rights are better pursued through a class action lawsuit or securities arbitration before the Financial Industry Regulatory Authority (FINRA). This is particularly true for Schwab Yield Plus (SWYPX and SWYSX) money market investors.

Important Facts to Consider Prior to Joining A Schwab Yield Plus Class Action

  • The pending Schwab Yield Plus class action Class Period is March 17, 2005 to March 17, 2008. Investors who made purchases prior to March 17, 2005 are not represented and will have no right to recovery in the Class Action.

  • In the case of Schwab Yield Plus losses, many investors sought safe, liquid, cash investments but were sold a product that was, in reality, much different. Such investors will have viable claims based on the investment's unsuitability. Because a suitability claim is dependent on an individual's circumstances, this claim cannot be prosecuted on a class wide basis.

  • Investors with significant losses are unlikely ever to be made whole in a Class Action. Class action representation may be attractive where individual losses are small so that any one investor may not have an economic interest in pursuing the case. However, investors who have lost more than $20,000 should strongly consider pursuing their rights on an individual basis.

  • Class actions are filed by attorneys seeking to represent all investors who have suffered a common wrong or purchased the same investment. Classes in securities cases are typically represented by the investor with the largest claim at stake. This often means that state pension funds or institutional investors will choose the attorneys and will be the ones who work on the strategy of the case. The interests of the class representative may not always be aligned with your interests; a specific example of this potential conflict is the inability to pursue suitability claims.

  • Class actions sometimes create hurdles to recovery for individual investors including depositions and motion practice which are generally not permitted in securities disputes decided before FINRA. FINRA arbitration usually takes 12 months, recovery through a Schwab Yield Plus class action may take several years.

The Advantage of Individual Schwab Yield Plus Arbitration

Arbitration before FINRA is done on an individual basis with the investor having input in the selection of counsel and participating in the litigation of the case. Individual investors receive specific counsel relative to their claims.

Securities arbitration is a superior forum to seek damages that exceed out of pocket losses, as well as interest, attorneys fees and punitive damages in an appropriate case.

To discuss your individual case, please contact us.


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