Seems like everybody cheats

[donheff]

Out of the clear blue sky I got a $3200 class action settlement check from Schwab. It appears to be related to their Yieldplus Fund. Interestingly, I only briefly had an account at Schwab and then decided to switch to Vanguard. I couldn't have had much in Yieldplus since I am not a money market kind of guy. Maybe I had $ in there during the transfer -- the right amount at the right time? In any event, I was surprised to see Chuck was scheming with their fund. Anybody know what this was about - hopefully some practice that could have seemed reasonable until the SEC put a new spin on it? Or is Chuck just as venal as everybody else?

 

[rescueme]

I've been involved in two class action suits over the years, but I was always notified of the possibility I would receive an "award".

The reason being is that they had to ensure that I knew that I could "opt out" and sue on my own (for a possible higher claim amount).

It's funny you didn't know about it before this time. Of course, if the notificaton got "lost in the mail" and you did not opt out, this is the result.

Your check was probably issued by a claims administrator (not the lawyer). If you are interested, you could just contact them for the original info on the action.

 

[donheff]

I've been involved in two class action suits over the years, but I was always notified of the possibility I would receive an "award".

The reason being is that they had to ensure that I knew that I could "opt out" and sue on my own (for a possible higher claim amount).

It's funny you didn't know about it before this time. Of course, if the notificaton got "lost in the mail" and you did not opt out, this is the result.

Your check was probably issued by a claims administrator (not the lawyer). If you are interested, you could just contact them for the original info on the action.

I have previously gotten a couple of notices but not this one. I would have noted both the firm and the projected amount. I'm not about to look a gift horse in the mouth so I will not pursue further info. The check is going in the bank - it will pay our airfare for a trip to Africa next February.

 

[chinaco]

I have received some settlements from other mutual fund companies also. No way to know if I was made whole.

I doubt investors are ever made whole.

... I couldn't have had much in Yieldplus since I am not a money market kind of guy. Maybe I had $ in there during the transfer -- the right amount at the right time?...

I think you hit on one of the core issues (it was not a money market fund...ultrasafe).... apparently the fund was portrayed as being more safe than it actually was...

The YieldPlus Fund was misrepresented as a safe, ultrashort-bond fund despite a growing concentration of mortgage-backed securities, the SEC and Finra said in statements.
In addition, the regulators said that Schwab deviated from the YieldPlus Fund's stated investment policy without obtaining the required shareholder approval.
At its peak in 2007, the fund had $13.5 billion in assets and more than 200,000 accounts, the SEC said. During the credit crisis of 2007 and 2008, the fund's assets fell to $1.8 billion, due to redemptions and declining asset values.

The SEC also alleged that Schwab officials knew that the fund was in trouble.
EXECUTIVES CHARGED

It charged two Schwab executives, Kimon Daifotis, former chief investment officer for fixed income at Charles Schwab Investment Management, and Randall Merk, a former president of that unit, with fraud in the sale of the fund.
The SEC claimed that in August 2007, Mr. Daifotis assured independent investment advisers and Schwab brokers that the fund had minimal outflows. The SEC said, however, that Mr. Daifotis knew that YieldPlus had experienced more than $1.2 billion in redemptions over the prior two-week period, which caused the fund to sell more than $2.1 billion of its securities at reduced prices.

http://www.investmentnews.com/article/20110116/REG/301169980


It seems that rather than go into a lengthy trial that would last years, the companies settle for a fraction of the damages some people experienced.

Based on a preliminary estimate, Berman said that shareholders, on average, will recover 25 to 27 percent of their losses before attorneys' fees, or 23 to 25 percent after fees. "The average settlement for securities class actions in this size range is about 4 percent of damages," he said.

Schwab reaches settlement over YieldPlus suit - SFGate


Financial Service companies are constantly being sued over something.

Sometimes funds get sued over something that was a mistake that resulted in loses.... other times it is out and out fraud or wrong doing.

Relatively minor mistakes.... that are not materially damaging (to me), I might be willing to continue doing business with the company.

For fraud or wrong doing occurs, I would no longer do business with them.

 

[donheff]

Thanks Chinaco. I would have to dig out my files to see if I actually took a significant loss in that fund but it isn't ringing a bell with me. At this point I am better off thinking I benefited from a fluke rather than researching and finding out I missed a loss.

 

[73ss454]

I had settlements from 3 different class action suits but they were from Whole Life Policies. What can I tell ya, I'm not the sharpest tool in the shed. The last on was for 31.5K, not bad but in the long run I'm still the looser.

 

[Danmar]

congrats. nice windfall.

 

[Texas Proud]

Surprisingly I have had many notices of potential 'rewards'.... all I have to do it fill out this 72 page claim form to prove that I am in the group...

Heck, if you got my name, YOU (the attorney suing) do the work.... you are getting paid a lot for not much work...

The last few I got were for 32 cents, $6 something and I believe $32... I could go online for the $32, so I did...


In the 10 or so notices etc., I have only received one check... so who is scamming who I think the lawyers are not being honest here....


PS.... I almost forgot the worst settlement some lawyer did.... this was for my 85 Mercury that had stalling problems.... someone sued after about 10 years and I think won a few years later... my reward for a piece of crap car that they KNEW had problems and covered it up A $500 COUPON to buy another Ford.... geez.... who would agree to this except the lawyer who walked with millions of $$$$$s....

 

[Backpacker]

Here is a link to a great web site that has hundreds if not thousands of class action suits. I think I could make a good income just searching and submitting claims.

Class Action Complaints,

 

[clifp]

Out of the clear blue sky I got a $3200 class action settlement check from Schwab. It appears to be related to their Yieldplus Fund. Interestingly, I only briefly had an account at Schwab and then decided to switch to Vanguard. I couldn't have had much in Yieldplus since I am not a money market kind of guy. Maybe I had $ in there during the transfer -- the right amount at the right time? In any event, I was surprised to see Chuck was scheming with their fund. Anybody know what this was about - hopefully some practice that could have seemed reasonable until the SEC put a new spin on it? Or is Chuck just as venal as everybody else?

Wow that is huge amount for the settlement. I got two checks one for $180 and one for $273 for the same fund. I used the funds pretty much as money market funds, like they were advertised. At one point I had 50K+ in both my IRA and taxable accounts in the YieldPlus accounts. I went back and looked and it seemed that I lost a a couple of thousand with the YieldPlus. (It could have been a lot worse the NAV of this "safe" ultrashort term bond fund with at one point a 4 star rating from M*, went from 9.75 in 2007 to 4.85 today.) So it looks like I got maybe ~$.20 on the dollar as part of the class action.

You probably ought to double check with Schwab, since my guess is you would have needed to see a ~$10K loss to be eligible for that type of settlement. On the other hand, maybe taking the money and running is the smarter strategy.

 

[Nords]

Thanks Chinaco. I would have to dig out my files to see if I actually took a significant loss in that fund but it isn't ringing a bell with me. At this point I am better off thinking I benefited from a fluke rather than researching and finding out I missed a loss.

I guess another concern would be whether that $3200 gets reported to the IRS as a brokerage transaction or even via some other means like a 1099.

But you'd probably see that early next year on your Schwab brokerage statement.

 

[Woz2000]

Not just financial companies, but most companies. And sometimes not because they did something wrong, but because the lawyers get creative.

Maybe I should just change 'sometimes the lawyers get creative' to 'many times, the lawyers get creative'.

Financial Service companies are constantly being sued over something.

Sometimes funds get sued over something that was a mistake that resulted in loses.... other times it is out and out fraud or wrong doing.

Relatively minor mistakes.... that are not materially damaging (to me), I might be willing to continue doing business with the company.

For fraud or wrong doing occurs, I would no longer do business with them.