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Rating:Another Boston Fund Firm Hit with Bond Fund Suit Not Rated 4.0 Email Routing List Email & Route  Print Print
Wednesday, July 09, 2008

Another Boston Fund Firm Hit with Bond Fund Suit

News summary by MFWire's editors

The bond fund loss suits keep coming. This time the company being accused of failing to fully disclose risks associated with investing in a fund is Wachovia's Evergreen Investments.

Stoltmann Law Offices, which also filed suit against Charles Schwab, has filed a Finra arbitration claim on behalf of investors in the Evergreen Ultra Short Opportunities Fund.

In a release Stoltmann said it believes its compliant is the first to be filed against the Wachovia fund.

Other fund firms that have been hit with suits over bond fund losses include Morgan Keegan, State Street and Fidelity.

Also, today the MFWire reported that Peter Cieszko will be taking over the CEO spot at Evergreen from Dennis Ferro at the end of the year.

Company Press Release

CHICAGO, July 9, 2008 (PRIME NEWSWIRE) -- Stoltmann Law Offices announces that it has filed a FINRA arbitration claim on behalf of two clients of Wachovia Securities LLC for investment losses in the Evergreen Ultra Short Opportunities Fund (EUBAX, EUBBX, EUBCX, and EUBIX).

It is believed to be the first FINRA arbitration complaint in the country against Wachovia Securities arising out of the collapse of the Evergreen Ultra Short Opportunities Fund.

The FINRA arbitration statement of claim alleges fraud, negligence, misrepresentations and omissions related to the failure of the firm to fully disclose risks associated with the Evergreen Ultra Short Opportunities Fund, according to Andrew Stoltmann, of Stoltmann Law Offices, in Chicago, Illinois.

The claim seeks recovery of investment losses, along with attorney's fees, interest and punitive damages. Stoltmann Law Offices expects to file additional claims against Wachovia Securities and Evergreen Investment Services, Inc. in upcoming weeks for investors across the U.S.

According to Chicago securities attorney Andrew Stoltmann, "Wachovia clients in the Evergreen funds thought they were getting a safe, secure, short term bond fund, comparable to a money market fund. Instead, they received a mutual fund concentrated in high risk, speculative, mortgage backed securities. The concentrated nature of the Evergreen fund made it more like a sector or hedge fund than the ultra short term bond fund Wachovia and Evergreen portrayed it to be to millions of investors."

The FINRA statement of claim alleges that the Evergreen Ultra Short Opportunities fund was marketed to the public with the goal of providing "current income consistent with preservation of capital and low principal fluctuation." According to the complaint, the Fund was marketed to investors as a higher-yielding alternative to money-market funds, and was solicited as offering a combination of safety and liquidity, or the ability to quickly access cash. The Fund was represented as a safe alternative to money market funds that preserve principal while being designed "to seek the highest total return by maximizing income and minimizing price fluctuations."

According to the statement of claim, while the bond market remained relatively steady over the last two years, the Evergreen Ultra Short Opportunity Fund's performance lagged dramatically.

According to the complaint, Bloomberg's website categorized the Evergreen Ultra Short Fund as "corporate/preferred-investment grade" funds, and 106 funds are categorized as such.

The statement of claim filed by the Stoltmann Law Offices does not name Wachovia financial consultants or employees.

According to Mr. Stoltmann, "We believe that the Wachovia employees who pitched the funds were victims of these products as well. In our view, the firm unfortunately misled the Wachovia financial consultants and their clients ended up paying the ultimate financial price."

Mr. Stoltmann also warned, "Multiple law firms have filed a class action lawsuit against Wachovia Bank. Evergreen victims are encouraged to analyze all of their legal options. Class action settlements too often lead to minimal settlements for clients. Wachovia Evergreen fund clients must be aware that if they stay in the class action and recover, they cannot also recover in a FINRA arbitration action." 

Edited by: Erin Kello

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