Schwab, Investors, Enter Settlement Over Investments in Mortgage Securities

Charles Schwab Corp. (SCHW) announced April 20 that it has entered into a memorandum of understanding tentatively settling the securities class action brought by investors in a Schwab short-term bond mutual fund over the fund’s substantial investments in mortgage-backed securities.

Without admitting liability, Schwab tentatively agreed to pay a total of $200 million to resolve the plaintiff investors’ federal securities law claims, the company said in the April 20 release. The company also noted that it had reserved $11 million for a previous summary judgment award for the plaintiffs and that the settlement was “preliminary,” subject to both a definitive ...