Securities: Class action accuses Schwab of deviating from investment objectives.
A class action has been issued in California alleging San Francisco-based Charles Schwab and Son of not acting in the best interests of investors in a fund. But, strangely, the announcement of the action claims "fraud."
The allegations are that the 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," according to the lawyers who have issued the proceedings.
The lawyers say "the fund deviated from its stated fundamental investment objective by investing more than 25 percent of its total assets in non-agency mortgage-backed securities and CMOs.. [that] deviation from the fund's primary investment objective led to tens of millions of dollars in shareholder losses due to a long-term decline in the value of non-agency mortgage-backed securities" hiding behind a "the suit alleges" statement.
But, the firm's media release provides no further information on the allegation of fraud: indeed, the word appears only in the headline.
And in the headline it makes no mention of "the suit alleges" or other weasel words. Hm.....
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