Summary
This 8-K filing from The Charles Schwab Corporation (SCHW) on November 29, 2010, provides an update on the ongoing consolidated class action litigation concerning the Schwab YieldPlus Fund. Previously, the company and other defendants had entered into preliminary settlement agreements totaling $235 million to resolve federal and state law claims. However, these initial agreements were put on hold due to a court ruling that questioned their ability to preclude certain out-of-state class members from pursuing additional claims. An amendment to the settlement agreements was reached and preliminarily approved by the court on November 24, 2010. This revised agreement aims to preserve the original settlement terms while releasing defendants from further claims by specific class members. Importantly, it provides these class members the option to opt-out of the settlement and pursue their claims independently. The company's ultimate settlement liability will be adjusted based on the amounts that opting-out class members would have received.
Key Highlights
- 1Update on Schwab YieldPlus Fund class action litigation.
- 2Original preliminary settlement of $235 million for federal and state law claims was initiated.
- 3Court ruling indicated that the initial settlement might not prevent certain out-of-state class members from filing additional claims.
- 4Defendants invoked termination provisions of the original settlement agreements.
- 5Amended settlement agreements received preliminary court approval on November 24, 2010.
- 6Amended agreements allow certain class members to opt-out and pursue separate claims.
- 7Company's total settlement liability will be reduced by the amounts allocated to opting-out class members.