Friday, February 13, 2009
Oppenheimer is Slapped with a Suit over its Bond Fund
Armie Margaret Lee
San Diego-based law firm Coughlin Stoia Geller Rudman & Robbins
has launched a class action suit against OppenheimerFunds
on behalf of purchasers of the Oppenheimer Champion Income Fund
The complaint, filed in the United States District Court for the Southern District of New York, alleges that the fund altered its investment style in late 2006 and began to significantly increase its risk unbeknownst to investors.
The defendants concealed that the fund had increased its exposure with risky investments, according to the suit.
An Oppenheimer spokesperson was not immediately available for comment.
Company Press Release
SAN DIEGO - (Business Wire) Coughlin Stoia Geller Rudman & Robbins LLP (“Coughlin Stoia”) (http://www.csgrr.com/cases/oppenheimerchampion/) today announced that a class action has been commenced in the United States District Court for the Southern District of New York on behalf all persons or entities who purchased or held shares of the Oppenheimer Champion Income Fund (“Champion Fund” or the “Fund”) offered by OppenheimerFunds, Inc. (“OppenheimerFunds”) between January 26, 2007 and December 9, 2008, inclusive (the ”Class Period”), including in connection with its January 26, 2007 and January 25, 2008 offerings (the “Offerings”).
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Darren Robbins of Coughlin Stoia at 800/449-4900 or 619/231-1058, or via e-mail at email@example.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.csgrr.com/cases/oppenheimerchampion/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint charges the Champion Fund, OppenheimerFunds and certain of its officers and directors with violations of the Securities Exchange Act of 1934, the Securities Act of 1933 and the Investment Company Act of 1940. The Champion Fund is an open-ended fixed income mutual fund launched and managed by OppenheimerFunds.
The complaint alleges that due to defendants’ positive, but false, statements, investors purchased and/or continued to hold shares in the Fund. The Champion Fund was a typical high-yield bond fund until late 2006 when, unbeknownst to investors, the Fund altered its investment style and began to significantly increase its risk in the hopes of seeking higher returns, including by dramatically increasing its use of derivative instruments, purchasing highly unstable mortgage-related and corporate bonds and significantly increasing its leverage exposure. Defendants concealed that the Champion Fund had increased its exposure with these excessively risky bets in the hopes of higher returns, such that investors remained unaware of these additional risk exposures.
Beginning in July 2008, the Champion Fund’s shares declined in tandem with other high-yield fund shares as the credit crunch exposed the poor underlying fundamentals of the financial sector’s mortgage risk management and problems with structured finance vehicles. As a result of these concerns, the Fund’s shares began to slide. Then, beginning in mid-September 2008 with the collapse of Lehman Brothers Holdings Inc. and American International Group, Inc. and continuing through December 2008, the Fund began to acknowledge the serious deterioration in its portfolio. As a result of these disclosures, the price of the Fund’s shares collapsed.
According to the complaint, the true facts which were omitted from the Registration Statements/Prospectuses or were known by the defendants but concealed from the investing public during the Class Period were as follows: (a) the Fund was no longer adhering to its objective to not take on any undue risk, but in an effort to achieve greater yields was pursuing riskier instruments; (b) the Fund’s internal controls were inadequate to prevent defendants from taking on excessive risk; (c) the extent of the Fund’s liquidity risk due to the illiquid nature of a large portion of the Fund’s portfolios was omitted; (d) the extent of the Fund’s risk exposure to derivatives and other high risk instruments was concealed; and (e) the extent of the Fund’s leverage exposure was misstated.
Plaintiff seeks to recover damages on behalf of all persons or entities who purchased or held shares of the Champion Fund between January 26, 2007 and December 9, 2008, including in connection with its January 26, 2007 and January 25, 2008 offerings (the “Class”). The plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Coughlin Stoia, a 190-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Coughlin Stoia Web site (http://www.csgrr.com) has more information about the firm.
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