..as reported in The Associated Press
By Rzl-avv-ajh | AP – Tue, Jul 5, 2011
FORT LAUDERDALE, Fla. – Charles Schwab has been ordered to pay compensatory damages and other costs to a Maryland couple who claimed the brokerage firm advised them to remain invested in a fund that eventually suffered steep losses while the company was liquidating its own holdings in the fund.
An arbitrator for the Financial Industry Regulatory Authority, the industry’s self-policing organization, awarded Richard Watts and Sally Warner Watts about $40,500 in compensatory damages, interest, attorney’s fees and other costs, said Fort Lauderdale attorney Mark A. Tepper, who represented the couple.
The couple had claimed losses of about $24,800 from their investment in the YieldPlus Fund, Tepper said Tuesday.
In their claim, the Wattses asserted that Charles Schwab encouraged them to hold onto their YieldPlus shares, while the company was selling off holdings in the fund from its other mutual funds, including those benefiting Schwab senior management.
YieldPlus posted steep losses in 2007 and 2008, because more than half its portfolio was made up of mortgage-backed securities, according to the claim.
A call to a Charles Schwab spokeswoman was not immediately returned Tuesday.
[archived news report on Charles Schwab]