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Our law firm is investigating potential claims on behalf of investors who sustained losses in Charles Schwab’s Total Bond Market Fund. In September, a class action lawsuit was filed against Charles Schwab relating to the Total Bond Market Fund. Potential class members should consider whether they should participate in the class action or file an individual securities arbitration claim.
According to the class action suit, Charles Schwab caused the Fund to deviate from its fundamental investment objective to track the Lehman Brothers U.S. Aggregate Bond Index (“the Index”). Specifically, “the Fund deviated from its stated investment objective by investing a material percentage of its portfolio in high risk non-agency collateralized mortgage obligations (“CMOs”). The non-agency CMOs were not a part of the Index and were substantially more risky than the U.S. agency securities and other instruments that comprised the Index.” Moreover, it is alleged that “the Fund?deviated from its stated fundamental investment objective by investing more than 25% of its total assets in non-agency mortgage backed securities and CMOs. The Fund’s investment objectives prohibited any concentration of investments greater than 25% in any industry (other than if necessary to track the Index).”
KlaymanToskes reminds investors of the benefits of filing an individual securities arbitration claim, as opposed to participating in a class action lawsuit. By participating in a class action lawsuit, an investor may only recover a nominal amount. However, if one has experienced significant losses in Schwab’s Total Bond Market Fund, it may be more beneficial for them to file an individual securities arbitration claim. In 2003, KlaymanToskes conducted a detailed study of securities arbitration versus class action. The study concluded that investors who file a securities arbitration claim traditionally obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit. To view the full results of the comparison, click here