The parties to two of the consolidated subprime-related securities lawsuits pending against Oppenheimer Funds have settled the case for a total of $100 million. This settlement has a number of interesting features, as discussed further below, including in particular aspects of the allocation of the total settlement amount between the two consolidated fund actions. The settlement also leaves the consolidated action filed against yet other Oppenheimer Funds pending.
In Spring and Summer 2009, a total of 32 class action lawsuits were filed against a number of the Oppenheimer Funds. These actions were brought by investors who had purchased shares of the Funds that were traceable to offering documents that allegedly contained misrepresentations and omissions. As a general matter, the investors alleged that the Funds had been marketed as representing investments that did not involve undue risk, but that beginning in 2006, the Funds had invested heavily in "risky" investments such as mortgage-backed securities, credit-default swaps and total-return swaps. When the financial crisis hit, these Funds later lost a substantial part of their net asset value.
As ultimately organized, the Oppenheimer Funds lawsuits were organized into three consolidated cases involving, respectively, the Oppenheimer Champion Income Fund; the Oppenheimer Core Bond Fund; and the consolidated "Rochester" cases (involving seven other Oppenheimer Funds).
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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