Jim Phillips, a retiree living in Illinois, said he turned down two compensatory offers from Charles Schwab because they covered less than a third of his YieldPlus fund losses. Phillips says he repeatedly called and visited a broker at a Schwab branch last September to ask him whether he should hold on to YieldPlus or sell it. The branch broker finally told Phillips in early March this year that he needed to see Schwab's client advocacy group about his losses.
On March 26th, seven days after Phillips sold his YieldPlus shares on his own, the branch broker at last suggested he sell the fund. On April 14th, Schwab's client advocate gave an initial compensatory offer to Phillips, which he refused. Eight days later, Phillips received a second offer of 32% of his losses and was told to take it or leave it.
Phillips decided to leave the offer because he gave the Schwab broker every opportunity to recommend that he sell YieldPlus. Instead, Phillips is filing an arbitration claim against Schwab after he combed through all of Schwab's sales materials and prospectuses without finding mention of the primary cause of the fund's collapse. His losses were a significant portion of his nest egg and he regrets trusting Charles Schwab.
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