SEC v. Charles Schwab Investment Management, Inc., et al.
Case No. 3:11-cv-00136-EMC (N.D. Cal.)
On January 11, 2011, the Commission filed a complaint against Charles Schwab Investment Management, Inc., Charles Schwab & Co., Inc., and Schwab Investments, (collectively, the “Defendants”). The complaint alleged that, between 2005 and mid-2008, the Defendants violated federal securities laws by making misleading statements regarding the Schwab YieldPlus Fund (“YieldPlus Fund”) and failing to establish, maintain and enforce policies and procedures to prevent the misuse of material, nonpublic information. Defendants were also charged with failing to adequately inform investors about the risks of investing in the YieldPlus Fund. See Litigation Release.
The Defendants were ordered to pay a total of $118,944,996.00 in disgorgement, prejudgment interest, and penalties (the “Fund”).
On April 4, 2011, the Court entered an order that created a Fair Fund for the monies paid into the Fund. The Court appointed Gilardi & Co., LLC as the Distribution Agent to oversee the administration and distribution of this Fair Fund to harmed investors.
On June 7, 2011, the Court issued an order that approved the distribution plan (“Plan”). See the Court’s Order and the Plan.
The Plan provides that the distribution of the Fair Fund shall be made on a pro rata basis to Eligible Claimants in accordance with the terms of the Plan.
On April 18, 2013, the Court granted the Commission’s motion and entered an order to disburse $110,453,855 from the Plan for distribution to eligible investors. See Order Approving Disbursement.
The distribution in this case was closed on October 11, 2016, when the Court granted the Commission’s motion and entered an order approving the final accounting, transferring the remaining funds to the United States Treasury, discharging the Distribution Agent, and terminating the Fair Fund. See the Court’s Order.