Class Action Lawsuit Filed Against Charles Schwab & Co.
A class action lawsuit was recently filed in the US District Court for the Northern District of California by the Seattle, Washington-based law firm, Hagens Berman Sobol Shapiro LLP, against San Francisco-based Charles Schwab & Co.
Hagens Berman Sobol Shapiro LLP, which is acting on behalf of investors who held shares in the Schwab Total Bond Market Fund (MUTF:SWLBX), alleges that Charles Schwab & Co. deliberately deviated from the fundamental business objectives of the Fund, which was to track the Lehman Brothers U.S. Aggregate Bond Index. Steve Berman, the Managing Partner of Hagens Berman Sobol Shapiro LLP and plaintiffs’ attorney commented on the class action lawsuit filed: “We intend to prove that Charles Schwab caused investors to suffer losses when it began investing in volatile, high-risk mortgage-backed securities without informing shareholders or seeking shareholder approval through a vote, which the company was obligated to do, according to the fund’s prospectus.”
Berman also contends that Charles Schwab & Co. deviated from the fundamental investment objectives outlined in the Schwab Total Bond Market Fund’s prospectus when it invested over 25 percent of its total assets in non-agency mortgage-backed securities and CMOs, which ultimately lead to tens of millions of dollars in shareholder losses.