7 On Your Side
Iranian comedian wins class-action against Schwab
SAN FRANCISCO (KGO) -- Charles Schwab announced it will pay $200 million to settle a class-action lawsuit that claimed investors were misled about the safety of mortgage-backed securities.
This class-action lawsuit and the arbitration centers on Charles Schwab's YieldPlus Bond Fund, which rapidly lost value in back in 2008 as the mortgage market melted down.
Tissa Hami is one of the few female Iranian comedians working. She has appeared on "The View." She is funny, but more than that, she is determined.
"I am thrilled that I won," said Tissa.
Tissa, with the help of the University of San Francisco Law Clinic, took on the brokerage Charles Schwab. She had her money in cash, but moved it at the urging of a Schwab financial consultant. She put $50,000 into an account and lost more than more than $13,000 in less than a year, most of it when she was out of the country at a funeral.
"I couldn't believe it, I thought it might be a typo," said Tissa.
She wanted her money safe, says she made that clear to Schwab, and was told this was a conservative investment.
"He told me about this investment, about Schwab YieldPlus, that he told me it was like cash, similar to a money market, that it was low risk, conservative," said Tissa.
"What the fund was really investing in was not safe, long-term investments, so it was very clear misrepresentation," said May Chang.
Chang was a law student at the University of San Francisco and helped Tissa file an arbitration with the Financial Industry Regulatory Authority, FINRA.
"These are extremely, extremely complex," said USF law professor Robert Talbot.
Talbot oversees the law clinic and showed 7 On Your Side the stacks of paperwork it took to see Tissa's case through.
And how about those who might say Tissa has managed to duck a bad outcome with the help of a slick attorney? The professor isn't buying it.
"It is not a lousy attorney getting off an investor who did something they shouldn't have done. The investor is supposed to be able to trust what the broker says because the broker has a fiduciary duty," said Talbot.
That is a duty to the client first and foremost.
In a statement Schwab says, "We're confident we did nothing wrong in this instance, but we're glad it is now resolved..."
Schwab says the loss was caused by "...the largest financial crisis to have occurred since the Great Depression."
But even with that, the company says it attempted to reach Tissa "...on two different occasions in early 2008 to alert her of the fund's decreasing value so that she could take the opportunity to sell it if she thought that was best."
Schwab reached the deal with investors, but the federal government and FINRA are still investigating the fund's collapse.
Statement from Charles Schwab spokesperson:
"Whenever any client of ours loses money, we take that very seriously, regardless of the causes. It is painful for anyone to lose part of an investment, and if we have played a contributing role in a loss, we have tried to work to find fair and reasonable settlements, or as in this instance, when there is disagreement, arbitration has also been an option. In this case, we believe all the required disclosures about the investment were made and that the losses sustained by the fund were caused by the profound and unforeseeable collapse of the financial markets--the largest financial crisis to have occurred since the Great Depression. Also, in this particular case, a Schwab representative attempted to contact Ms. Hami, who is herself a knowledgeable self-directed investor who formerly worked as a research analyst in financial services, on two different occasions in early 2008 to alert her of the fund's decreasing value so that she could take the opportunity to sell it if she thought that was best. She was traveling abroad on at least one of the occasions and didn't contact us back. We're confident we did nothing wrong in this instance, but we're glad it is now resolved and we all can turn our attention to the future."
7 on your side, michael finney
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