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Rating:OppFunds Agrees to Settle Class Action Suits for $100 Million Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, May 23, 2011

OppFunds Agrees to Settle Class Action Suits for $100 Million

Reported by Neil Anderson, Managing Editor

Is OppenheimerFunds [see profile] about to put its fixed income legal woes to rest for $100 million? On Friday the Manhattan-based mutual fund firm and two plaintiffs' law firms asked a federal judge in Colorado to approve a pair of settlements, totaling $100 million, to end two class action suits, In re Oppenheimer Champion Income Fund Securities Fraud Class Actions and In re Oppenheimer Core Bond.

The judge set the preliminary approval hearing for the settlements for Friday, May 27. The plaintiffs' law firms, including Labaton Sucharow and Hagens Berman Sobol Shapiro, would receive 25 percent of the combined settlements, with more thrown in to cover expenses. OppFunds neither admits nor denies wrongdoing.

The plaintiffs in the two suits attacked OppFunds for investing both Core Bond and Champion Income heavily in mortgage-backed securities while portraying the two funds as conservative investments.

This would not be the first settlement OppFunds has agreed to involving its fixed income funds' woes during the financial crisis. In November 2009, the mutual fund firm agreed to pay $20 million State of Oregon's 529 plan participants who invested in Core Bond; in December 2009, OppFunds agreed to a similar, $67.31-million settlement involving New Mexico's 529; and also in December 2009, OppFunds agreed to a similar, $77.23-million settlement involving Illinois' 529 [see The MFWire, 11/20/2009, 12/16/2009 and 12/22/2009].

According to Morningstar, Champion Income now holds $679.2 million and Core Bond holds $1.2 billion.

Company Press Release

NEW YORK--Labaton Sucharow LLP and Hagens Berman Sobol Shapiro LLP, on behalf of the Lead Plaintiffs today announced the settlement of two proposed class actions brought against OppenheimerFunds, Inc., among others, and certain officers and trustees of two funds – Oppenheimer Core Bond Fund and Oppenheimer Champion Income Fund.

The settlements total $100 million – $52.5 million in In re Oppenheimer Champion Fund Securities Fraud Class Actions and a $47.5 million settlement in In re Core Bond Fund. Labaton Sucharow LLP is Lead Counsel for the proposed class and Hagens Berman LLP is additional counsel for the Lead Plaintiffs. The settlements are subject to approval by the United States District Court for the District of Colorado.

“We believe these funds were presented as safe and conservative investments to consumers. We are pleased that we could recover some of the classes’ losses and, hopefully, improve transparency in the way that these types of funds are managed in the future,” said Labaton Sucharow Senior Partner Jonathan M. Plasse, who led the cases for Labaton Sucharow.

The lawsuits alleged that the investment policies followed by the funds resulted in investor losses when the funds suffered drops in net asset value.

“We are proud of these settlements,” said Sean Matt, partner of Hagens Berman. “If approved by the court, they will allow investors to recover a significant portion of their recoverable losses. We look forward to presenting the settlements to the court for its approval.”

Defendants vigorously defended the actions and have admitted no liability in the settlements.

About Labaton Sucharow

Labaton Sucharow LLP, with offices in New York, New York and Wilmington, Delaware, is one of the country’s premier law firms representing institutional investors in class action and complex securities litigation, as well as consumers and businesses in class actions seeking to recover damages for anticompetitive practices. The Firm has been a champion of investor and consumer rights for close to 50 years, seeking recovery of current losses and necessary governance reforms to protect investors and consumers. Labaton Sucharow has been recognized for its excellence by the courts and its peers. More information about Labaton Sucharow is available at www.labaton.com

About Hagens Berman

Seattle-based Hagens Berman Sobol Shapiro LLP represents whistleblowers, investors and consumers in complex and class-action litigation. The firm has offices in Boston, Chicago, Colorado Springs, Minneapolis, New York, Los Angeles, Phoenix, San Francisco and Washington, D.C. Founded in 1993, HBSS continues to successfully fight for investor rights in large, complex litigation. More about the law firm and its successes can be found at www.hbsslaw.com. Visit the firm’s class-action law blog at www.classactionlawtoday.com.

Company Press Release

NEW YORK, May 20, 2011 -- OppenheimerFunds, Inc. today announced that proposed settlements have been filed in two consolidated class action law suits relating to Oppenheimer Core Bond Fund and Oppenheimer Champion Income Fund that are pending in the federal district court in Colorado.

The parties in the cases are seeking preliminary approval of settlement agreements by the court so that information about the proposed settlements may be sent out to class members. OppenheimerFunds entered into these proposed settlement agreements to avoid a lengthy and expensive legal process, and in doing so has not admitted any wrongdoing in the matters raised in the law suits. OppenheimerFunds believes that that proposed settlements are in the best interest of shareholders of the Funds and are pleased to be moving toward a resolution of these matters.

About OppenheimerFunds, Inc.

OppenheimerFunds, Inc. is one of the nation's largest and most respected investment management companies. As of March 31, 2011, OppenheimerFunds, Inc., including subsidiaries, managed more than $185 billion in assets, including mutual funds having approximately 11 million shareholder accounts, including sub-accounts. Known for its tagline The Right Way to Invest, OppenheimerFunds, Inc. has been helping investors reach their financial goals since 1960. The Company and its controlled affiliates offer a broad range of products and services to individuals, corporations and institutions, including mutual funds, separately managed accounts, investment management for institutions, qualified retirement plans and sub advisory investment-management services.

Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

Before investing in any of the Oppenheimer funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses. Fund prospectuses and, if available, summary prospectuses contain this and other information about the funds. You may download and view a prospectus now, or to obtain one, ask your financial advisor or call OppenheimerFunds Distributor, Inc. at 1.800.CALL OPP (225.5677). Read prospectuses and, if available, summary prospectuses carefully before investing.

OppenheimerFunds are distributed by OppenheimerFunds Distributor, Inc. Two World Financial Center, 225 Liberty Street, New York, NY, 10281 

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