OppenheimerFunds Fails In Transparency, Fiduciary Duty Department
With investor confidence at an all-time low, you would think investment firms might be burning the midnight oil to keep lines of communications between themselves and shareholders as open and transparent as possible. Think again. One of the firms to apparently misplace its fiduciary duty to investors: OppenheimerFunds.
As reported Feb. 6 by Morningstar, several of Oppenheimer’s funds have crashed and burned in recent months, as managers of the funds kept taking on more and more risks - a fact that reportedly was kept quiet from investors.
Both the Oppenheimer Champion Income Fund (OPCHX) and the Core Bond Fund (OPIGX) suffered unexpected and massive losses in 2008. The Champion Income Fund lost nearly 80% of its value and the Core Bond Fund 40%.
It was more than just toxic securities that contributed to the funds’ losses. Specifically, Oppenheimer managers bought complex, off-balance-sheet swap contracts that in turn produced a leveraging effect on the funds, according to the Morningstar article. Ultimately, those added risks - which were never apparent nor communicated to investors - translated into even more losses.
The losses, as well as the investment strategy that created them, could land Oppenheimer in a legal bind. Already, several investors have filed arbitration claims with the Financial Industry Regulatory Authority (FINRA), charging Oppenheimer of gross mismanagement and negligence.
Meanwhile, a number of states also are getting ready to file lawsuits against OppenheimerFunds for billions of dollars in losses connected to Oppenheimer funds in state college savings programs.
Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
