Schwab facing fraud suit

us-money1New York’s attorney general plans to sue Charles Schwab, the largest online brokerage firm, for civil fraud for its marketing and selling of auctions-rate securities.  These short-term debt instruments whose prices are reset in periodic auctions caused billions in investor losses when the market collapsed last year.  School of Law Professor Tamar Frankel says ignorance of the risk involved with what they were selling would be no excuse for Schwab sales reps.

“When a promised diamond turns out to be glass, even the unknowing salesperson is liable.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

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