The Charles Schwab Corporation : Schwab YieldPlus Funds Investor Shares or Schwab YieldPlus Funds Select Shares

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Copyright (c) 2001
Stanford Law School

The Charles Schwab Corporation : Schwab YieldPlus Funds Investor Shares or Schwab YieldPlus Funds Select Shares Summary: The original class action lawsuit was filed on behalf of those who purchased Schwab YieldPlus Funds Investor Shares or Schwab YieldPlus Funds Select Shares from Charles Schwab Corporation during the Class Period.

Specifically, the complaint claims Charles Schwab Corporation headquartered in San Francisco, CA, the funds' underwriter, investment advisers and officers and directors issued untrue statements regarding the lack of diversification of these funds and the extent of investments assigned to sub-prime mortgage backed and related securities. The complaint alleges the funds registration statements and prospectuses contained untrue statements of material facts, and omitted important information regarding the funds' investments, ultimately misleading investors.

On Nov. 15, 2004, the Company began offering the Schwab YieldPlus investment funds through a registration statement and prospectus. The YieldPlus funds are advertised by the defendants as 'a safe alternative to money market funds that preserve principal while being designed with your income needs in mind'. Throughout the Class Period the Company claimed the funds were investments in a large, well-diversified portfolio, a seasoned team of taxable bond portfolio managers actively managed the funds, and that investment in Schwab YieldPlus would return higher yields on cash with only marginally higher risk, a smart alternative. Since July of 2007, the share price for the funds began lowering, for a total loss of 18 percent. Today the funds stand at an all-time low of $7.96, down more than 11 percent from Jan. 1, 2008.

The lawsuit claims the funds are not well diversified, instead concentrated in a single risky industry with more than 50 percent of the funds assets invested in the mortgage industry. The lawsuit seeks remedies under the 1933 Act on behalf of all fund purchasers during the Class Period.

On August 18, 2008, the Honorable William H. Alsup granted the motion of the lead plaintiff to appoint law firm Hagen Berman Sobol Shapiro LLP as its lead counsel in the case. On October 2, 2008, the plaintiffs filed a First Consolidated Amended Complaint against all defendants. The First Consolidated Amended Complaint adds additional claims and defendants. On November 6, 2008, the defendants filed several motions to dismiss the First Consolidated Amended Complaint.

On February 4, 2009, the Honorable William H. Alsup issued the Order on the various motions to dismiss. According to the Order, the motions to dismiss filed by the Schwab defendants and the independent trustees are granted in part and denied in part. PricewaterhouseCoopers’ motion to dismiss is granted. Finally, the motion to strike is denied. Plaintiff may move for leave to amend the dismissed claims by February 26, 2009.

On May 1, 2009, the lead plaintiffs filed a motion to certify the class. On August 21, 2009, Judge Alsup granted in part and denied in part the motion. On October 26, 2009, the lead plaintiff filed a Second Consolidated Amended Complaint. The parties soon engaged in discovery proceedings. In February 2010, the defendants and the plaintiffs filed various motions for summary judgment and one motion for partial summary judgment.

According to the Order Re 1940 Act Summary Judgment Motions dated March 30, 2010, and signed by Judge William Alsup, to the foregoing extent, plaintiffs’ motion for summary judgment is granted and defendant’s motion is denied.

According to a press release dated April 20, 2010, The Charles Schwab Corporation announced that it has signed a memorandum of understanding with plaintiffs to settle federal securities law claims in a civil class action lawsuit related to the Schwab YieldPlus Fund®. The preliminary settlement is subject to a definitive agreement and final approval of the court. Other related regulatory matters and a California state law claim remain open. As disclosed previously, the company is the subject of consolidated class action litigation filed between March and May 2008, and regulatory investigations relating to the investment policy, disclosures, and marketing of the Schwab YieldPlus Fund, an ultra-short bond fund (“Bond Fund”). The Bond Fund was designed to invest in a variety of fixed income instruments, including corporate bonds, asset backed securities, mortgage-backed securities, and other fixed income investments. The credit crisis that began in mid-2007 led to a decline in the value of a majority of fixed income investments market wide. As a result, certain Schwab clients who chose to invest in the Bond Fund experienced a decline in their investments, leading to the litigation. The settlement, in which the company, without admitting liability, would pay a total of $200 million to resolve plaintiffs’ federal law claims, allows the company to avoid the distraction and uncertainty of a trial, and the further possibility of a protracted appeals process.

On April 23, 2010, a Joint Motion for Settlement Joint Motion for Preliminary Approval of Settlement of Federal Securities Claims was filed. The proposed settlement is in the amount of $200 million in cash on behalf of Schwab YieldPlus Fund shares acquired between May 31, 2006, and March 17, 2008.

On May 3, 2010, the defendants filed a motion for summary judgment re Section 17200 Claim. The motion was granted on May 6, 2010. On May 14, 2010, a Joint Motion for Settlement Joint Motion for Preliminary Approval of California Class Settlement was filed. The proposed settlement is in the amount of $35 million in cash on behalf of Schwab YieldPlus Fund shares held by California residents on September 1, 2006.

The joint motions for preliminary approval of the settlement were granted on May 26, 2010. Plaintiffs filed several motions to opt out of the class action, which were denied by the judge in May 2010. The plaintiffs have filed motions for final approval of the settlement Federal Class and California Class settlements. The final settlement hearing was set for September 22, 2010, but the settlement was delayed due to a dispute about the class.

On October 4, 2010, Judge Alsup denied more plaintiffs' motions to opt out of the class action. The settlement fairness hearing is set for December 15, 2010.

According to a press release dated November 8, 2010, Charles Schwab Investment Management and Charles Schwab & Co., Inc. notified counsel for the plaintiffs in a consolidated class action lawsuit relating to the Schwab YieldPlus Fund® that Schwab is invoking the termination provisions of the settlement agreements in those actions. Schwab has also filed with the court a notice of withdrawal from the original motions filed jointly by plaintiffs and defendants for final approval of the settlements. At this time, plaintiffs continue to support the original motion for final approval, which remains pending and subject to a hearing scheduled for mid-December. The Charles Schwab Corporation provided the following additional comments: In the spring of 2010 after a lengthy and cooperative negotiation with Plaintiffs' lawyers, Schwab agreed to a substantial settlement of $235 million to settle all claims in the Yield Plus class action proceedings, regardless of their merit. Schwab was fully prepared to contest the allegations at trial but wanted to provide significant and speedy financial benefit to valued clients who purchased or held the fund during the period covered by the lawsuit and to put the matter behind us. Plaintiffs' lawyers had praised the settlement as one in which clients would receive "real money" and "a high percentage of recovery." Plaintiffs' recent assertions, that they continue to have the right to sue on behalf of non-California class members, means that none of the parties will receive the benefit of the agreement originally negotiated. As a result, Schwab has determined its only option is to withdraw from the settlement and litigate the case rather than subject the company and its shareholders to yet more litigation over the same issues. Schwab worked hard to settle this case for the benefit of its clients and shareholders and thought it had accomplished that goal.

The final fairness hearing was set for February 11, 2011. According to the Court Minutes entered that day, Court found it is a fair and adequate settlement. Counsel are directed not to communicate with intervener counsel.

On April 19, 2011, Judge Alsup granted the motions for final approval of the class settlement agreements and granted in part the motion for attorney's fees and expenses. The Final Judgment and Order of Dismissal with Prejudice was filed for both the federal securities class settlement fund and the California class settlement fund.

INDUSTRY CLASSIFICATION:
SIC Code: 6211
Sector: Financial
Industry: Investment Services

COMPANY/ISSUER NAME:	The Charles Schwab Corporation
COMPANY/ISSUER TICKER:	SCHW
COMPANY WEBSITE:	http://www.schwab.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Mike Labins, et al. v. The Charles Schwab Corporation, et al.

COURT: N.D. California	DOCKET NUMBER: 08-CV-01510
JUDGE NAME: Hon. William H. Alsup
DATE FILED: 03/18/2008	SOURCE: Notice of Filing
CLASS PERIOD START: 03/17/2005	CLASS PERIOD END: 03/18/2008
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Hagens Berman Sobol Shapiro LLP (Berkeley) 715 Hearst Avenue, Suite 202, Berkeley, CA, 94710 (voice) 510.725.3000, (fax) 510.725.3000, info@hbsslaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violation of the Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 03/18/2008
Declaration Of Timothy J. Burke In Support Of Motion By Karen Cunningham, Mark Kale And Monte Lewis For Appointment Of Lead Plaintiffs And Lead Counsel Pursuant To Section 27 Of The Securities Exchange Act Of 1933, And For Consolidation Of All Related Actions
Type: Declaration		Date on the document: 05/16/2008
Notice Of Motion And Motion By Karen Cunningham, Mark Kale And Monte Lewis For Appointment Of Lead Plaintiffs And Lead Counsel Pursuant To Section 27 Of The Securities Exchange Act Of 1933, And For Consolidation Of All Related Actions; Memorandum Of Points And Authorities In Support Thereof
Type: Motion		Date on the document: 05/16/2008
[Proposed] Order Granting Motion By Karen Cunningham, Mark Kale And Monte Lewis For Appointment Of Lead Plaintiffs And Lead Counsel Pursuant To Section 27 Of The Securities Act Of 1933, And For Consolidation Of All Related Actions
Type: Order		Date on the document: 05/16/2008
Notice Of Withdrawal Of Motion By Karen Cunningham, Mark Kale And Monte Lewis For Appointment Of Lead Plaintiffs And Lead Counsel Pursuant To Section 27 Of The Securities Exchange Act Of 1933, And For Consolidation Of All Related Actions
Type: Notice		Date on the document: 05/28/2008
Order Consolidating Actions And Requesting Information From Lead Plaintiff Candidates
Type: Order of Consolidation		Date on the document: 06/11/2008
Order Re Consolidating Levin, C 08-02487
Type: Order of Consolidation		Date on the document: 07/02/2008
Order Consolidating Cases
Type: Order of Consolidation		Date on the document: 07/23/2008
Order Granting Appointment Of Hagens Berman Sobol Shapiro LLP As Lead Counsel
Type: Order Appointing LP/LC		Date on the document: 08/18/2008

REFERENCE COMPLAINT

In Re Schwab Corp. Securities Litigation

COURT: N.D. California	DOCKET NUMBER: 08-CV-01510
JUDGE NAME: Hon. William Alsup
DATE FILED: 10/26/2009	SOURCE: Docket
CLASS PERIOD START: 03/17/2005	CLASS PERIOD END: 03/17/2008
TYPE OF COMPLAINT: Second Amended and Consolidated
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Hagens Berman Sobol Shapiro LLP (Berkeley) 715 Hearst Avenue, Suite 202, Berkeley, CA, 94710 (voice) 510.725.3000, (fax) 510.725.3000, info@hbsslaw.com Hagens Berman Sobol Shapiro LLP (Seattle) 1301 Fifth Avenue, Suite 2900, Seattle, WA, 98101 (voice) 206-623-7292, (fax) 206-623-0594, info@hagens-berman.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
First Consolidated Amended Complaint
Type: Complaint		Date on the document: 10/02/2008
Notice Of Voluntary Dismissal Without Prejudice Pursuant To Rule 41(A) Of The Federal Rules Of Civil Procedure
Type: Notice		Date on the document: 11/11/2008
Notice Of Settlement Conference And Settlement Conference Order
Type: Notice		Date on the document: 02/02/2009
Order Re Motions To Dismiss Of Schwab Defendants, Independent Trustees, And PricewaterhouseCoopers; Order Re Motion To Strike
Type: Order		Date on the document: 02/04/2009
Defendant Kimon P. Daifotis’ Opposition To Lead Plaintiffs’ Motion For Class Certification
Type: Other		Date on the document: 05/29/2009
Opposition To Class Certification
Type: Other		Date on the document: 05/29/2009
Answer To First Consolidated Amended Complaint
Type: Other		Date on the document: 06/05/2009
Defendant Kimon P. Daifotis’s Answer To Plaintiffs’ First Consolidated Amended Complaint
Type: Other		Date on the document: 06/05/2009
Order Re Motion Class Certification
Type: Order		Date on the document: 08/21/2009
Second Consolidated Amended Complaint
Type: Complaint		Date on the document: 10/26/2009
Declaration Of Kimberly L. Taylor In Support Of The Independent Trustees' Motion For Summary Judgment
Type: Declaration		Date on the document: 02/11/2010
Independent Trustees' Motion For Summary Judgment
Type: Motion		Date on the document: 02/11/2010
Schwab's Opposition To Motion For Summary Judgment Re Section 17200; And Schwab's Notice Of Motion And Cross-motion For Summary Judgment Re Section 17200
Type: Notice		Date on the document: 03/04/2010
Schwab's Opposition To Motion For Summary Judgment Re: Negative Causation
Type: Other		Date on the document: 03/04/2010
Schwab's Opposition To Motion To Exclude Christopher M. James
Type: Other		Date on the document: 03/04/2010
Reply Memorandum In Support Of Independent Trustees' Motion For Summary Judgment
Type: Memorandum		Date on the document: 03/18/2010
Reply Memorandum In Support Of Schwab's Motion For Summary Judgment
Type: Memorandum		Date on the document: 03/18/2010
Order Re 1940 Act Summary Judgment Motions
Type: Summary Judgment		Date on the document: 03/30/2010
Declaration Of Steve W. Berman In Support Of Motion For Preliminary Approval Of The Settlement
Type: Declaration		Date on the document: 04/23/2010
Joint Motion For Preliminary Approval Of Settlement Of Federal Securities Claims
Type: Motion		Date on the document: 04/23/2010
Plaintiffs’ Memorandum In Support Of Joint Motion For Preliminary Approval Of Settlement Of Federal Securities Claims
Type: Memorandum		Date on the document: 04/23/2010
Order Granting Individual Defendants' Unopposed Motion For Summary Judgment Re Section 17200
Type: Summary Judgment		Date on the document: 05/06/2010
Declaration Of Steve W. Berman In Support Of Motion For Preliminary Approval Of The Settlement Of The California Class Claims
Type: Declaration		Date on the document: 05/14/2010
Joint Motion For Preliminary Approval Of California Class Settlement
Type: Motion		Date on the document: 05/14/2010
Plaintiff’s Memorandum In Support Of Joint Motion For Preliminary Approval Of Settlement Of California Class Claims
Type: Memorandum		Date on the document: 05/14/2010
Notice Of Pendency And Proposed Settlement Of Class Action
Type: Notice		Date on the document: 05/26/2010
Notice Of Proposed Settlement Of California Class Action
Type: Notice		Date on the document: 05/26/2010
Order Preliminarily Approving California Class Settlement And Providing For Notice
Type: Order		Date on the document: 05/26/2010
Order Preliminarily Approving California Class Settlement And Providing For Notice
Type: Order		Date on the document: 05/26/2010
Civil Pretrial Minutes
Type: Memorandum		Date on the document: 09/22/2010
Order Regarding "Motions To Intervene As Plaintiffs" And For "Recusal Of Lead Counsel"
Type: Order		Date on the document: 09/27/2010
Order Regarding Motions For Final Approval Of The Class Settlement Agreements And Letters From Class Members
Type: Order		Date on the document: 09/27/2010
Order Denying "Motions To Intervene As Plaintiffs [And] Motions For Lead Counsel[]'s Recusal"
Type: Order		Date on the document: 10/04/2010
Memorandum Opinion Regarding Dispute Over Release Of Section 17200 Claim in The Federal Securities Class Settlement Agreement
Type: Memorandum		Date on the document: 10/14/2010
Schwab Defendants' Notice Of Withdrawal From Joint Motions For Final Approval Of Settlement Of Federal Securities And California 17200 Claims
Type: Notice		Date on the document: 11/08/2010
Order Regarding Submissions On The Validity Of Defendants' Notice Of Termination
Type: Order		Date on the document: 11/10/2010
Order Preliminarily Approving Amendment No. 4 To Stipulation Of Settlement
Type: Order		Date on the document: 11/24/2010
Final Judgment And Order Of Dismissal With Prejudice
Type: Order		Date on the document: 04/19/2011
Final Judgment And Order Of Dismissal With Prejudice Of California Class Action
Type: Order		Date on the document: 04/19/2011
Order Granting Motions For Final Approval Of Class Settlement Agreements (Dkt. Nos. 837 and 841) And Granting In Part Motion For Attorney's Fees And Expenses (Dkt. No. 844)
Type: Order Approving AF&E		Date on the document: 04/19/2011
U.S. District Court Civil Docket
Type: Docket		Date on the document: 04/19/2011

OTHER DOCUMENTS
Class Action Complaint for Violations of the Federal Securities Laws - Jury Trial Demanded
Case Name and/or Number: Gerry Hageman, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 03/31/2008
Complaint - Jury Trial Demanded
Case Name and/or Number: R. Daniel Bohl, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 04/08/2008
Class Action Complaint for Violation of Federal Securities Laws - Jury Trial Demanded
Case Name and/or Number: Nils Flanzraich, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 04/16/2008
Class Action Complaint for Violation of the Federal Securities Laws - Jury Trial Demanded
Case Name and/or Number: Hugh John Tully, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 04/16/2008
Class Action Complaint
Case Name and/or Number: Mike Labins, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 04/21/2008
Class Action Complaint - Jury Trial Demanded
Case Name and/or Number: Arnita Coleman, et al. v. The Charles Schwab Corporation, et al.
Type: Complaint		Date on the document: 06/17/2008

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