Schwab Withdraws Approval for YieldPlus Suit Settlements
Schwab also filed with the court a notice of withdrawal from the original motions filed jointly by plaintiffs and defendants for final approval of the settlements.
In a press release, Schwab said plaintiffs’ recent assertions, that they continue to have the right to sue on behalf of non-California class members, means that none of the parties will receive the benefit of the agreement originally negotiated. As a result, Schwab has determined its only option is to withdraw from the settlement and litigate the case rather than subject the company and its shareholders to yet more litigation over the same issues.
Schwab said it worked hard to settle this case for the benefit of its clients and shareholders and thought it had accomplished that goal. The company agreed to a generous settlement (see Schwab to Pay $200M in Bond Fund Suit Settlement), but only in return for an end to all litigation over the facts and claims alleged in the consolidated complaints.
Now that plaintiffs have asserted that Schwab is not entitled to the primary benefit it was to receive under the settlement, the company contends it has no choice but to withdraw from the joint motions for final approval.
In the spring of 2010, Schwab agreed to a total settlement of $235 million to settle all claims in the YieldPlus class action proceedings, regardless of their merit (see Schwab Settles State YieldPlus Fund Suit). The company said it was fully prepared to contest the allegations at trial but wanted to provide significant and speedy financial benefit to clients who purchased or held the fund during the period covered by the lawsuit and to avoid lengthy litigation.