A class-action lawsuit over another ultra-short bond mutual fund is about to end in a multi-million-dollar settlement. A notice has gone out
notifying investors in the Fidelity Ultra-Short Bond Fund
that the Boston Behemoth has agreed to a $7.5-million settlement, pending a fairness hearing on May 11 at the U.S. District Court in Boston [read more about the settlement
"We can confirm that the parties have agreed to settle the Zametkin / Ultra-Short Bond Fund case and that the US District Court has given preliminary approval to the settlement. Notification forms are being sent by the settlement administrator to affected customers," Fidelity spokesman Steve Austin told MFWire.com
. "As we stated in the settlement agreement, Fidelity believes that all of the claims were entirely without merit and agreed to a settlement solely to avoid the cost and the distraction to the firm of further litigation."
"We're pleased with the settlement," the lead plaintiff's attorney, Evan Kaufman
of Robbins Geller Rudman & Dowd
, told MFWire.com
. "We think it's an excellent recovery for the class."
Under the proposed settlement, Kaufman and the other plaintiff's attorneys could ask for up to 30 percent, i.e. $2.25 million. The parties agreed to the settlement back in June, and a U.S. District Court judge gave preliminary court approval on December 23.
The class-action hinges on allegations that Fidelity did not adequately mitigate the risks of investing in the fund, as the fund invested heavily in mortgage-backed securities and dropped 16.95 percent from June 8, 2007 through May 30, 2008. The original suits (which were later combined into this single class action) were first filed in June 2008 [see MFWire.com
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