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In re Oppenheimer Rochester Funds Group Sec. Litig.

United States District Court for the District of Colorado

January 20, 2012, Decided; January 20, 2012, Filed

Master Docket No. 09-md-02063-JLK-KMT; (MDL Docket No. 2063)



Kane, J.

I issued my initial memorandum Order in these MDL securities fraud class actions on October 24, 2011 (Doc. 312), denying a Motion to Dismiss filed by Defendant Massachusetts Mutual Life Insurance Company ("MassMutual") (Doc. 284) and granting in part and denying in part Oppenheimer Defendants' Joint Motion to Dismiss Consolidated Complaints (Doc. 285). See In re Oppenheimer Rochester Funds Grp. Sec. Litig.,     F. Supp.2d    , 2011 U.S. Dist. LEXIS 122866, 2011 WL 5042066 (D. Colo. October 24, 2011). The Joint Defendants and MassMutual moved for reconsideration, and on January 18, 2012, I granted those Motions in limited part to (1) correct the erroneous application in the October 24 Order of a superseded version of the Southern District of New York's decision in TCW/DW North American Govt. Income Trust Securities Litigation, 941 F. Supp. 326, 341 (S.D.N.Y. 1996)("Opinion on  [**12] Reconsideration" appended to superseded opinion commencing at p. 341) and (2) clarify an error on page five of the Order that included Rochester National Fund in the list of Defendant Funds whose Prospectuses articulated "capital preservation" as part of their stated investment objective. See Order re Mot. for Reconsideration (Doc. 348).

Finding neither correction altered the ultimate conclusion that Plaintiffs have stated viable claims for relief under §§ 11 and 12(a)(2) of the 1933 Act against each of the Defendant Funds, including National Fund, I denied the Joint Motion to the extent it sought reconsideration of the Order on its merits. See Order (Doc. 348) at 3-5. Nevertheless, because the clarifications are substantive, I issue this Amended Opinion and Order nunc pro tunc to October 24, 2011, and WITHDRAW the original Order.

Shareholders in seven different Oppenheimer municipal bond funds (the "Funds") brought a total of thirty-two putative securities fraud class actions in federal courts throughout the country naming the individual Funds, Fund managers, and trustees as Defendants. Shareholders' principal claims are asserted under Sections 11, 12, and 15 of the Securities Act  [**13] of 1933, 15 U.S.C. § 77k, l, and o, based on allegations that the Funds misrepresented or failed to disclose the nature and degree of risks associated with the extremely risky investment strategies relying on low quality, unrated, and/or illiquid bonds, or on highly-leveraged derivative instruments known as "inverse floaters." All of the Funds pitched themselves as vehicles for generating high yields of tax-free interest income from municipal bond portfolios that would be carefully assessed and monitored, and six of the seven Funds articulated this objective in terms of generating as much income as is "consistent with preservation of capital."

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838 F. Supp. 2d 1148 *; 2012 U.S. Dist. LEXIS 6975 **; Fed. Sec. L. Rep. (CCH) P96,922; 2012 WL 171035


Prior History: In re Oppenheimer Rochester Funds Group Sec. Litig., 2011 U.S. Dist. LEXIS 122866 (D. Colo., Oct. 24, 2011)


floaters, inverse, Funds, Plaintiffs', investors, Defendants', disclosures, misleading, leverage, allegations, Prospectus, municipal, risks, illiquid, Prospectuses, prices, invest, Complaints, collapse, holdings, motion to dismiss, omissions, valuation, preservation, liquidity, registration statement, investment strategy, municipal bond, mutual fund, volatility

Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Securities Law, Civil Liability Considerations, General Overview, Pleadings, Complaints, Requirements for Complaint, Registration of Securities, False Registration Statements, Civil Liability, Communications & Prospectuses, Definition of Seller, Securities Act Actions, Secondary Liability, Controlling Persons, Evidence, Burdens of Proof, Allocation, Governments, Legislation, Statutory Remedies & Rights, Investment Companies, Inferences & Presumptions, Presumptions, Elements of Proof, Disclosures, Bespeaks Caution Doctrine, Damages, Fraudulent Interstate Transactions, Defenses, Statute of Limitations, Time Limitations, Initial Offerings, Burden Shifting