MIAMI, Fla., April 10, 2008 (PRIME NEWSWIRE) -- The securities law firm of Dimond Kaplan & Rothstein, P.A. (http://www.dkrpa.com) announced today that it is investigating investor claims involving investment losses in the following Charles Schwab ultra-short bond funds: the Schwab YieldPlus Fund Investor Shares (Symbol:SWYPX) and the Schwab YieldPlus Fund - Select Shares (Symbol: SWYSX). Charles Schwab marketed its YieldPlus funds as safe investments that would provide "higher potential returns than money market funds, with only marginally higher risk." But the YieldPlus mutual funds have decreased in value by 25% during the first quarter of 2008. That performance is far worse than the performance of money market funds and other ultra-short bond mutual funds during the same period.
Charles Schwab represented that its YieldPlus mutual funds were "a safe alternative to money market funds that preserve principal while being designed with your income needs in mind." Charles Schwab also represented that its YieldPlus funds were designed to provide "high current income with minimal changes in share price," and that this objective would be accomplished by investing in a "well-diversified" portfolio of bonds with durations of one year or less. Millions of investors bought the YieldPlus funds in reliance on those representations, making the Schwab YieldPlus funds among the top selling mutual funds in 2006. In fact, Charles Schwab's representations are belied by recent events.
Despite Charles Schwab's representations about the safety of its YieldPlus mutual funds, the funds' values have dropped precipitously in value over the past year. For example, the assets of the Yield Plus Fund Investor Shares have fallen from a high of $13.5 billion in June 2007 to just $2.5 billion as of March 20, 2008. Dimond Kaplan & Rothstein, P.A. believes that those dramatic losses were directly caused by Charles Schwab's mismanagement of the funds. Specifically, the funds apparently were over-concentrated in risky mortgage-backed securities that contained subprime loans. The Funds also invested heavily in collateralized debt obligations, which are risky structured financial instruments. Many of those investments have no active secondary market, making the securities illiquid with difficult-to-determine values. Further still, many of the bonds had durations of more than two years, contrary to Charles Schwab's representations.
Dimond Kaplan & Rothstein, P.A. is an AV-Rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. They have represented investors against most major Wall Street brokerage firms in claims involving stocks, options, auction rate securities, variable annuities, hedge funds, mutual funds, bonds, and collateralized mortgage obligations (CMOs). If you suffered securities investment losses, please contact Jeffrey Kaplan, Esq. of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or jkaplan@dkrpa.com for a free case evaluation. You also may visit Dimond Kaplan & Rothstein, P.A. on the web at www.dkrpa.com or www.investmentfraud-lawyer.com.
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