RS Investment Management LLP ("RS Investment" or the Company) provides investment advisory services.
Several purported shareholder class action lawsuits have been filed against RS Family of Mutual Funds and certain of its present and former executive officers in the United States federal courts of California and Maryland. The California and Maryland filings were brought on behalf of all purchasers, redeemers and holders of shares of the RS family of mutual funds within the class period indicated below. Both actions also have similar allegations.
The California lawsuit was brought against Defendant for violation of section 36 of the Investment Company Act of 1940 and common law breach of fiduciary duty. According to the Complaint, this action concerns a fraudulent scheme and course of action, which was intended to benefit mutual funds and their advisors at the expense of mutual funds investors. In connection therein, the complaints states that defendants violated their fiduciary duties to their customers in return for substantial fees and other income for themselves and their families. Specifically, the Complaint alleges that the wrongful conduct involves the timing of mutual funds while the prospectus for the funds at issue created the misleading impression that mutual funds were vigilantly protecting investor against the negative effects of timing.
The Maryland action charges Defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, the Defendants engaged in illegal and improper trading practices, in concert with certain institutional traders, which caused financial injury to the shareholders of the RS Funds. According to the Complaint, the Defendants surreptitiously permitted certain favored investors, including the John Doe Defendants, to illegally engage in Timing of the RS Funds whereby these favored investors were permitted to conduct short-term, in-and-out trading of mutual fund shares, despite explicit restrictions on such activity in the RS Funds' prospectuses.
Numerous motions to dismiss various Complaints were filed on February 25 and March 7, 2005.
According to the docket, on April 4, 2005, the Court entered an Order administratively closing the action pending other proceedings. Further, on April 6, 2005, in an Order by the Judicial Panel on Multidistrict Litigation, the case was transferred to the District of Maryland (C05-874 MDL 1586).
Additionally, oral arguments concerning numerous pending motions for dismissal were held on October 5, 2007. Those motions were ordered denied on October 19, 2007.
According to the docket dated November 5, 2007, discovery proceeded in the multi-district mutual funds litigation. Simultaneously, some of the Defendants were involved in settlement discussions with the Plaintiffs. This settlement process has been impacted by parallel regulatory proceedings occurring at the Securities and Exchange Commission. Nevertheless, the court has been advised that several settlements have been agreed upon in principle. Additionally, numerous individuals and firms have been voluntarily dismissed by Plaintiffs throughout 2005 and 2006. On June 11, 2007, the overseeing judges issued a scheduling order calling for completion of discovery by March 28, 2008.
On April 22, 2010, summary notice of proposed Settlements were filed. The Court granted preliminary approval of the Settlements on May 19. On October 25, the Court granted final approval of the Settlements, including an award of Attorneys’ Fees and Expenses, and entered Final Judgment.
The Funds and the symbols for the respective Funds are named as follows:
RS Diversified Growth Fund (Nasdaq: RSDGX)
RS Emerging Growth Fund (Nasdaq: RSEGX)
RS Growth Fund (Nasdaq: RSVPX)
RS Information Age Fund (Nasdaq: RSIFX)
RS Internet Age Fund (Nasdaq: RIAFX)
RS Midcap Opportunities Fund (Nasdaq: RSMOX)
RS Smaller Company Growth Fund (Nasdaq: RSSGX)
RS Contrarian Value Fund (Nasdaq: RSCOX)
RS Global Natural Resources Fund (Nasdaq: RSNRX)
RS Partner Fund (Nasdaq: RSPFX)
