November 28, 2008
Suit claims The Reserve mislead investors
Attorneys have filed a lawsuit in New York charging The Reserve and TD Ameritrade with misleading investors who lost money in the Yield Plus fund.
Federal authorities stepped in to prop up The Reserve's Primary Fund after its shares fell below $1and its investment in Lehman Brothers Holding Inc. was erased by Lehman Brothers declaring bankruptcy in September.
The temporary federal insurance program did not cover Yield Plus, USA Today reported Friday.
The suit, proposed as a class action suit, claims The Reserve went after riskier investments than it advertised. TD Ameritrade advertised Yield Plus as
just like a money market, the suit claims.
It would be meaningful if it was just 5 percent, but it's more significant than that, said attorney Darren Robbins of Coughlin Stoia Geller Rudman & Robins, the firm handling the investors' case.
Attorneys say losses could be in double-digit percentages, the newspaper reported.
An TD Ameritrade spokeswoman declined to comment, but The Reserve spokeswoman Ming Lee Hatch, said the firm's lawyers were reviewing the charges.
It is our intention to defend ourselves vigorously, she said.