Ex-Schwab Executive Agrees to Pay $150,000 in to Settle SEC YieldPlus Case
Ex-Charles Schwab Corp. (SCHW) investment company manager Randall Merk agreed to pay a $150,000 civil fine to resolve a Securities and Exchange Commission lawsuit accusing the company of misleading investors in its YieldPlus fund.
Merk and another Schwab executive misrepresented to investors that the fund was comparable to a cash investment and only slightly riskier than a money market fund, the SEC said in its complaint filed in federal court in San Francisco in January.
The YieldPlus Fund fell to $1.8 billion in assets in 2008 from a peak of $13.5 billion in 2007 after deviating from its stated policy by investing more than 25 percent of fund assets in private-issuer, mortgage-backed securities, the SEC said.
Merk, who left Schwab this year, didn’t admit wrongdoing, according to a filing today. Steven Goldberg, a spokesman for Merk, declined to comment on the settlement. Merk was chief executive officer of Charles Schwab Investment Management Inc. and actively involved in the sale and marketing of YieldPlus, the SEC said.
Schwab, based in San Francisco, agreed to pay $119 million to resolve the SEC lawsuit and $235 million to settle investor lawsuits.
The case is SEC v. Merk, 11-00137, U.S. District Court, Northern District of California (San Francisco).
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