Northstar Financial Advisors, Inc. v. Schwab Investments

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

The Court heard oral argument on defendants’ Motion to Dismiss the Third Amended Complaint (Third MTD) in this matter on August 4, 2011. For the reasons set forth below, the Motion is GRANTED.

I. Introduction and Procedural History

On August 28, 2008, Plaintiff Northstar Financial Advisors, Inc. (Northstar) filed its first complaint in this class action lawsuit on behalf of all persons who owned shares of the Schwab Total Bond Market Fund (the Fund) at any time from August 31, 2007 to the present. Compl. (Dkt. No. 1) ¶ 1. Northstar is a registered investment advisory and financial planning firm serving both institutional and individual clients. Id. ¶ 9. Northstar manages both discretionary and nondiscretionary accounts on behalf of investors in its role as an investment advisor. Id. Northstar traded through Charles Schwab’s Institutional Advisor Platform, and purchased shares in the Fund for its clients. Id. ¶¶ 11-12.

Although Northstar has amended its Complaint three times, its core allegations remain the same. Northstar alleges that defendants deviated from the Fund’s investment objective to track the Lehman Brothers U.S.…