Guggenheim Investments [profile] is about to shell out $5.5 million to end a class-action lawsuit over a leveraged index mutual fund. Last week a federal judge in San Jose gave final approval of a settlement of Rafton v. Rydex Series Fund.

MFWire.com could not immediately reach a spokesperson for Guggenheim or attorneys with Sparer Law Group, the lead plaintiffs' law firm, for comment on the settlement.

The case stems from the performance woes of the Rydex Inverse Government Long Bond Strategy Fund [profile]. Two years ago Guggenheim Partners bought Rydex' then-parent, Security Benefit, and last year Guggenheim created Guggenheim Investments by combining its former Claymore, Security Benefit and Rydex asset management businesses into one [see MFWire.com, 9/21/2011].

Sparer first filed the suit two years ago, accusing Rydex of failing to adequately disclose that the fund's performance tracks the inverse of the relevant index on a daily basis, making it less-suitable for longer hold-times. The two side proposed the settlement in July 2011. 

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