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Welcome to the website for the administration of the Securities and Exchange Commission v. Charles Schwab Investment Management, et al. enforcement action, Case No. CV-11-0136 WHA (the “Action”). This website has been established to provide general information related to the Action, the resulting Plan of Distribution and related administration. The capitalized terms used on this website and not defined herein shall have the same meanings ascribed to them in the Distribution Plan.

Distribution

On June 23, 2014, the Court Ordered the Distribution Agent to proceed with the residual distribution of unclaimed funds. This re-distribution is in proportion to Harmed Investors' prior distributions and is being made to Class Members who cashed their May 14, 2013 distribution check and would receive at least $25.00 in the re-distribution. Residual distribution payments will commence mailing the second week of July 2014. Please allow sufficient time for postal delivery and delays.

On May 14th, 2013 the Distribution Agent commenced mailing Distribution Payments to eligible Harmed Investors. Please allow sufficient time for postal delivery and delays. Thank you for your patience.

Distribution Payments have been calculated as described in the Court-approved Distribution Plan and are based on the pro-rata amount of funds allocated to eligible Harmed Investors based on their Recognized Loss. Under the plan, two separate Distribution Funds were established: the YieldPlus Fair Fund (for investors in YieldPlus) and the Total Bond Disgorgement Fund (for investors in Total Bond). As stated in the Notice regarding the distribution that was mailed in April of 2012, eligible Harmed Investors will only receive a Distribution Payment if the amount of their payment following pro-rata allocation equals or exceeds $25.00. Postcards were mailed to Harmed Investors with valid claims but whose pro-rata recovery falls below the $25.00 payment threshold.

Background of the Litigation

On January 11, 2011, the Securities and Exchange Commission (the “Commission”) commenced an Action against Charles Schwab Investment Management (“CSIM”), Charles Schwab & Co. and Schwab Investments (the “Defendants “) alleging they made misleading statements regarding the Schwab YieldPlus Fund and failed to inform investors of the risk of investing in the fund. CSIM and Schwab Investments also deviated from the YieldPlus and Total Bond Funds’ concentration policies of not investing more than 25% of the funds’ assets in any one industry when they invested more than 25% of each fund’s assets in non-agency mortgage-backed securities.

A settlement was reached and, without admitting or denying the Commission’s allegations, CSIM and Charles Schwab & Co. agreed to pay disgorgement, prejudgment interest and penalties totaling $118,944,996. The Net Available Funds will be distributed to Potentially Harmed Investors. A total of $110,000,000 is available for distribution to the Harmed Investors in this Action.

On July 17, 2012, a Final Judgment was ordered in the Securities and Exchange Commission against the Defendant Kimon P. Daifois (Case No. CV-11-0137 WHA) resulting in an additional $325,000 of civil penalties and disgorgement to be added to the Net Available Funds. You may view the Final Judgment under the Case Documents link above.

You can read further information on the background of this case, including the Complaint, by
visiting the Securities and Exchange Commission website at
www.sec.gov/litigation/litreleases/2011/lr21806.htm.

Harmed Investors

Harmed Investors are defined as individuals or entities who:

  • held shares of the Schwab YieldPlus Fund as of February 28, 2006, and/or purchased or acquired shares of the Schwab YieldPlus Fund between March 1, 2006 and March 31, 2008, inclusive, and/or
  • held shares of the Schwab Total Bond Fund as of September 29, 2006, and/or purchased or acquired shares of the Schwab Total Bond Fund between September 30, 2006 and March 31, 2008, inclusive.

How to Participate

CS&Co. and other brokers who had clients invested in the funds during the relevant periods provided the Distribution Agent with information about their customers’ investments in YieldPlus and Total Bond. Based on this information, certain investors were separately mailed a Record of Fund Transaction Form. The form will outline the investor’s transactions in the YieldPlus and/or Total Bond Funds and losses as calculated according to the Distribution Plan. When only Potentially Harmed Investor Name and Address information was provided, a Generic Proof of Claim Form was mailed. Mailing of the Notice and Record of Fund Transaction Forms and Generic Proof of Claim Forms commenced on April 23, 2012. If you received a Record of Fund Transaction Form please follow the instructions provided on the form. If you did not receive a Record of Fund Transaction Form and have eligible transactions, please contact the distribution agent via email or phone to request a generic proof of claim form. All generic proof of claim forms or Record of Fund Transaction Dispute Forms must be submitted to the Distribution Agent no later than June 29, 2012.

Please visit our Frequently Asked Questions link at the top of the page for additional information.

Current Case Status:
Mailing Distribution Payments

Disclaimer:

This case is separate and distinct from the In Re Charles Schwab Corporation Securities Litigation. If you would like more information on that case, please visit its website at www.schwabyieldplussettlement.com