According to a press release dated April 23, 2009, the complaint alleges that Oppenheimer Core Bond Fund, while representing itself as conservative and appropriate as “a long-term investment” and as “part of a retirement plan portfolio” was exceeding its own risk controls by investing in high-risk, highly leveraged bets that directly conflicted with its stated conservative strategy. The Core Bond Fund lost more than 35 percent of its value in 2008 and another 10 percent in the first three months of 2009 alone.
The Oppenheimer Core Bond Fund was promoted as appropriate for, and was offered by, several 529 college savings plans, such as the Illinois 529 Bright Start plan, the Oregon College Savings Plan, the Texas Lonestar 529 Plan, Maine’s NextGen College Investing Plan, the New Mexico Scholar’s Edge and College Sense 529 plans and Nebraska’s State Farm College Savings Plan. The Fund was also offered by several retirement plans and annuities. Defendants are charged with violations of the Securities Act of 1933 and the Investment Company Act of 1940 for issuing false and misleading statements as to the Fund’s overall strategy and investment objectives in the Fund’s filings with the Securities and Exchange Commission.
On May 29, 2009, a notice of voluntary dismissal was filed by the plaintiff in the first filed complaint, pursuant to Fed.R.Civ.P. 41(a)(1)(A)(i), effectively dismissing all defendants without prejudice.
The case continued in a related filing also filed in the U.S. District Court of Colorado, Ferguson, et al. v. OppenheimerFunds, Inc. et al., case number 09-CV-01186. According to the Amended Order signed on September 29, 2009, Dr. Pattison is appointed Lead Plaintiff for the Class and Dr. Pattison’s selection of the law firm of Labaton Sucharow LLP as Lead Counsel and The Shuman Law Firm as Liaison Counsel for the Lead Plaintiff and the Class is approved. On October 13, 2009, the Lead Plaintiff filed a Consolidated Class Action Complaint, and the defendants responded by filing two motions to dismiss on December 3, 2009.
On March 2, 2010, the Court entered the Order signed by Judge John L. Kane granting the unopposed motion to consolidate. Specifically, according to the Order, In re: Oppenheimer Champion Fund Securities Class Fraud Class Actions, Civil Action No. 09-cv-00386-JLK-KMT (consolidated with 09-cv-525-JLK-KMT) and In re Core Bond Fund, Civil Action No. 09-cv-01186-JLK-KMT (hereinafter referred to as the Fixed Income Fund Actions) and Donald L. Cohn and Karen S. Cohn v OppenheimerFunds, Inc., et al, Civil Action No. 09-cv-02738-JLK-KMT (hereinafter the Cohn Action) are hereby consolidated for discovery purposes only, pursuant to Federal Rule of Civil Procedure 42(a). The law firm appointed as Lead Counsel in the Fixed Income Fund Actions (Lead Counsel) shall be principally responsible for overseeing and conducting the discovery in these consolidated actions.
In May 2010, the case was stayed pending mediation, and on July 22, 2010, the stay was lifted. On May 19, 2011, the parties filed a Stipulation and Agreement of Settlement, and an unopposed motion for preliminary approval of a class settlement. The proposed settlement is in the amount of $47,500,000. The settlement was preliminarily approved on June 1, 2011. The final settlement hearing was set for September 30, 2011.
On September 30, 2011, Judge John L. Kane approved the distribution plan, the motion for award of attorneys' fees and reimbursement of expenses. The settlement was approved and all claims asserted in the Consolidated Class Action Complaint were dismissed with prejudice and without costs to any party except as otherwise provided in the Stipulation.