A reported $36.2 million in losses sustained by OppenheimerFunds Oregon state-sponsored college savings plans is the subject of a lawsuit brought by Oregon state against the fund company.
Filed in Oregon state court, the suit alleges violations of securities law, breach of contract, breach of fiduciary duty, negligence and negligent misrepresentation.
Specifically, it claims that the investment focus of the Core Bond Fund, meant to be a conservative bond investment, was changed, which increased the risk of losses by that fund without properly informing investors. Bloomberg has reported that the fund, worth an estimated $1.1 billion, lost 42 percent during the past 12 months.
Oregon is 1 of 5 states currently investigating OppenheimerFunds with respect to possible fiduciary duty violations. The bond funds allegedly bought into mortgage-linked securities prior to the sub-prime mortgage crash. According to a statement issued by Oregon state, OppenheimerFunds instead of acting conservatively, placed people's savings "into a hedge- fund-like investment fund that took extreme risks in a search for speculative large returns."
Illinois, Texas, Maine, and New Mexico are the 4 other states investigating college fund losses related to alleged fund mismanagement by OppenheimerFunds. College funds invested by the state of Illinois with OppenheimerFunds reportedly lost $85 million last year.
Known as 529 plans, the savings programs are sponsored by state governments and administered by investment firms such as Fidelity Investments, AllianceBerstein Holdings and OppenheimerFunds.
APRIL-16-09: Oregon Sues OppenheimerFunds Over $37 Million in College Savings Plan Losses
[BLOOMBERG: OPPENHEIMERFUNDS SUED BY OREGON ON COLLEGE FUND LOSS]
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Last updated on Apr-16-09 |
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