Former Schwab YieldPlus Executive Agrees to Pay $150,000 Penalty to Settle SEC Charges
The U.S. Securities and Exchange Commission (SEC) announced that Randall Merk (Merk), former Executive Vice President of Charles Schwab & Co., Inc. and President of Charles Schwab Investment Management, has agreed to pay a $150,000 fine to settle charges brought against him in connection with Schwab’s YieldPlus Fund.
The SEC’s complaint filed in January 2011 alleged that Merk, and former YieldPlus Fund manager Kimon Daifotis, committed securities law violations in connection with the offer, sale and management of the YieldPlus Fund including misleading investors about the risks of the ultra-short bond fund. The complaint also claims that Merk approved other Schwab funds’ redemptions of their YieldPlus holdings when Merk knew, or should have known, that the portfolio managers for those funds had received material, non-public information about the YieldPlus Fund.
According to Bloomberg, the YieldPlus Fund had $13.5 billion in assets at its peak in 2007 before tumbling to $1.8 billion 8 months later after fund managers deviated from the fund’s stated investment policies.
The SEC reports that the litigation against Kimon Daifotis continues.