Charles Schwab Fraud
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Charles SchwabBrief description of Charles Schwab Charles Schwab & Company is the nation’s leading online and discount brokerage. Along with competitors such as E-trade, Schwab provided easy trading during the late nineties tech boom. In recent years, however, attempts to capitalize on the tarnished images of higher-profile investment firms have backfired. Why is Charles Schwab accused of wrongdoing? Schwab has faced two separate lawsuits – one filed in 1999 and the other in 2002 – that allege that they knowingly charged clients higher-than-market prices. The first was filed on behalf of all investors who had purchased securities through Schwab in a three-year period beginning in February 1996. They are seeking damages. The second was filed by municipal bonds market watchdog Kevin Olson, and included nine other firms as defendants. No damages are being sought in this case, but rather an injunction preventing firms from setting unfair prices and charging excessive fees. Schwab made a second mistake in early 2000 when they allowed transactions to occur without fees, then charged them six months later in September of that year. The company attributed the error to computer glitches. Irate customers filed a class action lawsuit in October 2000. Finally, Schwab’s eagerness to differentiate itself from the growing list of tarnished Wall Street firms has brought on another investor suit. In a series of advertisements, Schwab emphasized its independence from the problems that plagued Wall Street: in one, company founder Charles Schwab even claimed that they didn’t underwrite stocks. The suit was filed in Los Angeles on behalf of investors who purchased stocks that Schwab underwrote. |