SAN FRANCISCO, June 24, 2008 (PRIME NEWSWIRE) -- The securities law firm of Shepherd Smith Edwards & Kantas LLP (www.sseklaw.com) announced today that it has filed a $700,000 arbitration claim on behalf of a Bay Area investor in the California Tax-Free YieldPlus Fund ("SWYCX"). Charles Schwab actively marketed various YieldPlus funds to millions of investors, with the objective to "seek high current income with minimal changes in share price." The funds, classified as ultra-short term bond funds, were marketed to investors as a higher-yielding alternative to money-market funds, and were solicited as offering a combination of safety and liquidity, or the ability to quickly access cash. Charles Schwab represented the Funds as a safe alternative to money market funds that would preserve principal while being "designed with your income needs in mind." Charles Schwab represented that such investments were suitable for short term investors, and would safely provide income with little price fluctuations.
According to a note on Schwab's website pertaining to SWYCX, the fund's exposure to variable-rate bonds which were pegged to the London Interbank Offering Rate ("LIBOR") contributed to the decline. Demand for these bonds has decreased dramatically amid the ongoing liquidity crisis, causing their prices to drop. The fund's assets now stand at less than $600 million, compared with the mid-2007 level of $1.1 billion. These securities were illiquid, thinly traded, untested and difficult to value. As a result, SWYCX was especially vulnerable to changes in market conditions.
Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and others with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses. We have represented clients in Federal and state courts and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. Collectively, our clients have recovered more than $100 million through our assistance in negotiation, mediation, arbitration and litigation. More than 90% of those who have engaged our services have recovered all or a portion of their losses. We have represented clients in approximately 1,000 matters in court, arbitration and/or mediation.