The Wall Street Journal first broke the story in December 2007 when it reported that Columbia Management was shutting down its Columbia Strategic Cash Portfolio fund. The reason behind the liquidation of one of largest enhanced cash funds began with a $20 billion withdrawal from a single institutional investor. Columbia Management’s, Strategic Cash Portfolio troubles stem to extensive exposure to risky asset-backed securities and structured investment vehicles (SIVs) tied to real-estate mortgages.
Columbia Management is the investment arm of Bank of America. At the time the Columbia Strategic Cash Portfolio was shuttered, only a few investors were able to liquidate their positions in the fund. Others were given their pro rata share of the fund’s underlying securities in lieu of cash. Still other shareholders were told they could cash out at the fund’s current share price at a loss.
The Columbia Strategic Cash Portfolio was marketed as an enhanced cash fund and a suitable substitute for money market accounts. In reality, the risks of this investment were significantly greater than the risks associated with cash and cash like investments.
Today, as investors evaluate liquidating the securities distributed to them from their Strategic Cash Portfolios, they are determining they have sustained significant losses.
Investors that were sold shares in the Columbia Strategic Cash Portfolio as a suitable cash equivalent might have strong claims against Columbia Management and Bank of America relating to the manner in which the fund was presented versus how it was invested.
Our affiliation of lawyers is actively involved in advising institutional investors in evaluating their legal options when confronted with significant investment losses.