Charles Schwab Settled Auction Rate Securities Fraud Case
San Francisco based brokerage Charles Schwab has settled an investor suit alleging the firm misrepresented the risks associated with investing in auction rate securities (ARS). Schwab and the NY attorney general’s office agreed last Friday to discontinue the action with prejudice with each party paying its own legal fees. As is customary with such settlements, the terms of the agreement were kept confidential and both Schwab and the AG’s office refused to comment on the deal.
The suit alleged that Charles Schwab & Co., Inc. had misled investors about the fact that it helped prop up the securities by providing liquidity. Unfortunately, when the credit crisis hit in 2007 and 2008 all the major firms ceased that support and the auction rate securities market froze and there was no liquidity. Schwab in only one of dozens of financial services firms that have come under fire for misrepresenting the risks associated with the ARS products. Many municipalities have filed civil actions seeking damages after their brokers persuaded them to to issue auction rate securities rather than the more conventional bond offerings.
If you have suffered losses associated with the purchase of auction rate securities, contact the experienced securities fraud attorneys at Colling Gilbert Wright for a free case evaluation.