| 17 December 2009

The Charles Schwab Corporation (SCHW) is no stranger to lawsuits and legal battles, but this one is perhaps more perturbing to the legal team than most. Al Parish, a one-time economics professor in South Carolina has been snuffed out and convicted by South Carolina courts for masterminding a whopping $90 million Ponzi scheme affecting 600 investors. (One wonders, how do these guys get so big without drawing more scrutiny?)

What makes this case potentially more infuriating for Schwab lawyers is the taunting image of Parish as Superman, er... excuuuse us, Economan. Financial Adviser Magazine covered the story here.

Parish will share the same prison facilities as that other, well know Ponzivictorian, Bernie Madoff, in North Carolina. One presumes Mr. Parish will serve time in a cell capable of restraining is super-economic powers.

Unfortunately for Schwab, at least 53 people involved in the class-action lawsuit held their accounts at Schwab. According to FA Magazine, "The class-action claims are based on Schwab’s alleged role as a broker-dealer in materially aiding the sale of securities and as a control person of those liable under the South Carolina Uniform Securities Act of 2005."

Schwab's response is what you would expect. “Schwab didn’t have any relationship with him other than serving as custodian for assets held under management,” says Sarah Bulgatz, Schwab’s director of corporate public relations. “He wasn’t a Schwab employee, and we didn’t refer any clients to him, and we weren’t aware of or participate in his misappropriation of assets."

If you listen carefully, you can hear the snickers in the TD Ameritrade (AMTD) war room.

Good luck, Chuck. May your Kryptonite glow strong.