S.E.C. v. DAIFOTIS
874 F.Supp.2d 870 (2012)
SECURITIES and EXCHANGE COMMISSION, Plaintiff,
Kimon P. DAIFOTIS and Randall Merk, Defendants.
No. C 11-00137 WHA.
United States District Court, N.D. California.
June 12, 2012.
ORDER GRANTING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
WILLIAM ALSUP, District Judge.INTRODUCTION
In this enforcement action by the Securities and Exchange Commission, defendant moves for summary judgment. For the reasons stated below, the motion is GRANTED IN PART.
The Commission has alleged various securities law violations by defendants Kimon P. Daifotis and Randall Merk — executives of subsidiaries of Charles Schwab Corporation — in their management of the Schwab YieldPlus Fund, an ultra-short bond fund. Defendant Daifotis was the Chief Investment Officer of fixed income at Charles Schwab Investment Management, Inc., ("CSIM"). CSIM is the investment adviser for the Schwab family of mutual funds, including the YieldPlus Fund, which were distributed by Charles Schwab & Co., Inc. ("CS & Co"). Both CSIM and CS & Co. are wholly owned subsidiaries of Charles Schwab Corporation (collectively "Schwab"). YieldPlus Fund's value began to decline in the summer of 2007 and investors began withdrawing their funds. Within the first two weeks of August 2007, redemptions exceeded one billion dollars. The alleged misstatements and omissions at issue in this motion were supposedly made by defendant between 2005 and 2008.
On November 21, 2011, the Commission entered into a settlement with defendant Merk and final judgment was entered as to him. Defendant Daifotis, is the sole remaining defendant.