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OppenheimerFunds Settles Fund Case for $100 Million


OppenheimerFunds is paying $100 million to settle a class-action lawsuit against two of its funds, the Oppenheimer Champion and the Oppenheimer Core Bond funds

The Denver U.S. District Court will hold a hearing on Sept. 30 with the fund shareholders to approve the settlement.

OppenheimerFunds' attorneys said the firm decided to settle the case "to eliminate the burden, expense, uncertainty and risk of further litigation." They also denied any wrongdoing.

Shareholders sued the funds in 2009, saying they believed they were holding low-risk, conservative investments. The Champion Income Fund lost 78.5% of its value in 2008, while the Core Bond Fund lost 35.8%.

The plaintiffs' lawyer, in court documents, said Oppenheimer portrayed the funds as "diversified, high-yielding [and] appropriate as part of a retirement plan portfolio," when, in fact, they were "substantially more risky than represented" because they "took huge gambles on mortgage-backed securities and illiquid derivatives."

 

Court to Allow SEC Suit Vs. Gabelli Son to Proceed

Reversing a decision of a lower court. U.S. District Court for the Southern District of New York Judge Jed S. Rakoff is allowing a Securities and Exchange Commission lawsuit against Marc Gabelli, son of Mario Gabelli, to proceed.

The younger Gabelli is accused of allowing hedge fund Folkes Asset Management, from 1999 to 2002, to market time $20 million in the Gabelli Growth Fund, in exchange for the hedge fund investing $1 million in the fund. The hedge fund was able to foresee when the share prices of the fund were about to rise or fall through time zone arbitrage.

 

Warburg Buys Majority Stake in Mutual Fund Store

Private equity firm Warburg Pincus has acquired a majority stake in The Mutual Fund Store as well as a minority stake in Summit Partners, which invested in The Mutual Fund Store in 2006.

Adam Bold, founder, chief executive officer and chief investment officer of The Mutual Fund Store, will continue to run the company. However, it is expected that Warburg Pincus will gain seats on the board of directors.

Terms of the transaction were not disclosed.

Michael Martin, managing director and co-head of Warburg Pincus' financial services group, said, "We believe there is a tremendous opportunity to build on The Mutual Fund Store's success in providing sound investment advice to the mass affluent market."

Morgan Stanley served as financial adviser and Bryan Cave served as legal adviser to The Mutual Fund Store. For Warburg Pincus, Wachtell Lipton Rosen & Katz and WIlkie Farr & Gallagher served as legal advisers, and Ernst & Young provided accounting diligence support.