Answers
| 1. |
What is the Charles Schwab Corporation Corporation Securities Litigation California Settlement?
On March 30, 2010, Judge William Alsup granted plaintiff's motion for summary judgment finding that the failure to hold a shareholder vote to
change the limit on the percent of assets that the Fund could hold in private-label mortgage-backed securities violated the Investment Company Act.
Prior to September 1, 2006, the Fund applied a 25% limit on these assets. Plaintiff alleges that defendants increased this limit in September 2006
without holding a required shareholder vote on the change and that the excess investments in private-label mortgage-backed securities caused a
substantial portion of the Fund's losses.
The Court ordered the parties to address two possible measures of restitution, which is the only remedy available. First, the Court asked what the
performance of the Fund would be if the investments in mortgage-backed securities over the 25% limit had been invested in cash ("Cash Option").
Second, the Court asked how the Fund would have performed if the amount over 25% had been reallocated to other assets in the Fund ("Reallocation Option").
Plaintiff's experts calculated the value of restitution to the Class under the Cash Option to be $52,203,379 and $33,014,433 under the Reallocation
Option. The average of these two options, $42,608,906, represents an 82.1 percent recovery. Defendants' experts calculated values at $12 million and
$5 million, respectively, under these options. It is difficult to predict how this battle of experts would have been resolved by the Court. If the
Court chose to accept defendants' methodology, the settlement far exceeds the recovery under such a scenario. Settlement avoids the uncertainty of a
bench trial, the costs and risks associated with continued litigation, including the danger of no recovery or a protracted delay on appeal, and provides
a substantial benefit to the Class now.
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| 2. |
Why did I receive multiple Notice and Claim packets? Can I participate in the Federal and California Settlements?
There are two proposed settlements in In re Charles Schwab Corporation Securities Litigation, the Federal and the California settlements. If you are eligible to participate in both matters:
1. You will receive separate Notice and Record of Fund Transactions pertaining to each of the Federal and California settlements for each account with eligible transactions invested in the Schwab YieldPlus Investor Fund and/or the Schwab YieldPlus Select Fund for which you qualify.
OR
2. You will need to complete separate Proof of Claim forms pertaining to each account with eligible transactions invested in the Schwab YieldPlus Investor Fund and/or the Schwab YieldPlus Select Fund for which you qualify.
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| 3. |
What does the Settlement provide?
Defendants have agreed to pay $35,017,295.91 million in cash. The balance of this fund after payment of Court-approved attorneys' fees and expenses and
the costs of settlement administration, including the costs of printing and mailing the Notice Packets (the "Net Settlement Fund"), will be
divided among all eligible Class Members based on the formula set out in the Court-approved Notice.
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| 4. |
How do I know if I am a part of the Settlement?
The Settlement Class includes: All Persons who were a California Resident and held shares of the Schwab YieldPlus Fund on September 1, 2006.
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| 5. |
How do I participate in the Settlement?
To qualify for payment, you must be a member of the California Class as defined in the Notice.
1. If you received a Record of Fund Transactions, you do not need to submit a claim or a request for payment. Your holdings and transactions that qualify for a share of the settlement have been obtained from Schwab's transaction records. Your estimated recovery is included with your Notice packet. If you do not agree with the Record of Transactions and you wish to submit a Transaction Dispute form, your dispute must be postmarked on or before December 1, 2010.
OR
2. If you received a Proof of Claim form, you will need to complete and return the Proof of Claim listing all your shares held as of September 1, 2006 and any YieldPlus share sales and dividend income from September 1, 2006 to June 2, 2008 and supply supporting documentation.
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| 6. |
I have not yet received my copy of the Notice and a Record of my Fund Transactions or Proof of Claim Form.
Class Members who held their YieldPlus Fund shares directly with Charles Schwab & Co., Inc. were previously mailed notice of pendency of this case and of the proposed settlement. At the time those notices were mailed, the Settlement Administrator did not have account information for the accounts that purchased YieldPlus Fund shares through a broker other than Charles Schwab & Co., Inc. You have been identified as having held YieldPlus Fund shares as of September 1, 2006 with a broker other than Charles Schwab & Co., Inc. and are, consequently, being mailed this notice through a supplemental notice process.
If you believe that you are a member of either the Federal and/or the California Class and have not received a printed copy of the Notice and a Record of your Fund Transactions, please contact the Settlement Administrator.
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| 7. |
How much will my payment be?
Your share of the Net Settlement Fund will depend on the number of Class Members, how many Fund shares you held on the relevant date and when you acquired and sold Fund shares.
1. If you received a Record of Fund Transactions, the Record of Fund Transactions you received details the data we have on file for the Fund shares you held on September 1, 2006, as well as when you sold these shares (if you did), and estimates your total recovery from the settlement. Your share will be calculated using the Court-approved formula, as provided on page 5 of the Notice.
OR
2. If you received a Proof of Claim, you must submit the required Proof of Claim and supporting documentation showing Fund holdings on September 1, 2006 and other Fund transaction activity from September 1, 2006 and June 1, 2008. Your share will be calculated using the Court-approved formula, as provided on page 5 of the Notice.
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| 8. |
I don't agree with what is on my Record of Fund Transactions. How do I change what is provided there?
If you believe the Record of Fund Transactions mailed to you is incorrect or incomplete, please submit the Transaction Dispute Form along with supporting documentation to the Claims Administrator for review by December 1, 2010.
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| 9. |
What are the exceptions to being included?
You are not a Member of the California Class if you are a Defendant, a member of the immediate family of one of the Individual Defendants, a current or former director or officer of Defendants, or a legal representative, heir, successor, or assign of any excluded party. You are also excluded from the California Class if you timely and validly requested exclusion, have arbitrated to final judgment any of the Released Claims, have previously settled any of the Released Claims, or the Settling Parties have agreed to allow you to be excluded from the Class.
If you held Schwab YieldPlus Fund shares at any time other than September 1, 2006, that alone does not make you a Class Member. You are a Class Member only if you were a California resident on September 1, 2006 and held Schwab YieldPlus Fund shares on September 1, 2006.
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| 10. |
How do I exclude myself from the Settlement?
You may choose to exclude yourself from this class action at this time, with respect to shares held at broker-dealers other than Charles Schwab & Co., Inc. In order to properly exclude yourself, if you have not done so already, please refer to the instructions in the Notice. Your exclusion request must be postmarked no later than December 1, 2010.
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| 11. |
How do I tell the Court that I do not like the Settlement?
If you are a Class Member, you can object to the settlement if you do not like any part of it, including the request for attorneys' fees. You can state the reasons why you think the Court should not approve it. The Court will consider your views. To object, you must send a letter saying that you object to the California Class settlement in In re Charles Schwab Corporation Securities Litigation, Case No. C 08-01510 WHA. Be sure to include your name, address, telephone number, your signature, the number and type of Schwab YieldPlus Fund shares you held on September 1, 2006, and the reasons you object. Any objection must be mailed or delivered such that it is received by each of the following no later than December 1, 2010:
Clerk of the Court
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
United States Courthouse 450 Golden Gate Avenue
San Francisco, CA 94102
| Counsel for Lead Plaintiff: |
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Counsel for Defendants: |
| Steve W. Berman |
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Darryl P. Rains |
| HAGENS BERMAN SOBOL & SHAPIRO LLP |
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Morrison & Foerster LLP |
| 1918 Eighth Avenue, Suite 3300 |
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755 Page Mill Road |
| Seattle, WA 98101 |
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Palo Alto, CA 94304 |
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| 12. |
What if I do nothing?
If you do nothing, and
1. you received a Record of Fund Transactions, the Settlement Administrator will calculate your share of the settlement and send you a check for that amount, and you won't be able to start a lawsuit of any kind, including an arbitration, continue with a lawsuit of any kind, including an arbitration, or be part of any other lawsuit or arbitration against the Defendants about the Released Claims, which are described in the Stipulation of Settlement.
OR
2. you received a Proof of Claim form, you will remain a member of the Class but will not receive any payment, even though you won't be able to start a lawsuit of any kind, including an arbitration, continue with a lawsuit of any kind, including an arbitration, or be part of any other lawsuit or arbitration against the Defendants about the Released Claims, which are described in the Stipulation of Settlement. If you do not request exclusion, in order to receive a payment you must complete and return the enclosed Proof of Claim along with supporting documentation.
PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.
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| 13. |
Do I have Lawyers in this case?
The Court appointed Hagens Berman to represent you and other Class Members. These lawyers are called Lead Counsel. You will not be charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.
PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.
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| 14. |
How do I get more Information about the Settlement?
You can contact the Settlement Administrator by phone at 1-888-955-2703, by email at classact@gilardi.com, or visit the website at www.gilardi.com.
Please do not call the Court or the Clerk of the Court for additional information about the settlement.
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