U.S. District Judge William Alsup said that a 2007 e-mail that a Charles Schwab managing director wrote could prove to be a “mea culpa smoking gun” since the executive says Schwab should tell investors it misrepresented risks in the short-term bond fund.

The plaintiff’s attorney, Reed Kathrein, quoted the e-mail, which Janice Diamond urged a superior to “admit our mistakes and make changes to prevent this from happening again.” Judge Alsup commented, “The jury could certainly construe that to mean, ‘We have not been honest with our investors.’”

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