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Oregon Live – Oregon won the first round in a $36 million court battle against the former investment manager of its college fund by keeping the lawsuit out of federal court.
U.S. District Judge Michael Hogan ruled that the case be remanded to the Marion County Circuit Court, rejecting an attempt by OppenheimerFunds to avoid the jurisdiction of an Oregon court.
Attorney General John Kroger and Treasurer Ben Westlund have sued OppenheimerFunds for $36 million, saying it falsely promoted a high-risk college investment plan as "conservative." OppenheimerFunds’ Core Bond Fund, valued at $89 million in the state’s College Savings Plan last September, caused big losses in eight of 15 Oregon college investment portfolios, including those labeled conservative or ultraconservative.
Marketwatch – Mutual-fund shareholders are seeing at least one benefit from the credit freeze: bond managers are back in the trading action after years of playing second fiddle to hedge funds.
Bond-fund managers say the exodus of leveraged hedge funds from their market pushed out spreads on debt securities to historic levels — a dramatic change from the middle of the decade.
Marketwatch – Mutual-fund shareholders are seeing at least one benefit from the credit freeze: bond managers are back in the trading action after years of playing second fiddle to hedge funds.
Bond-fund managers say the exodus of leveraged hedge funds from their market pushed out spreads on debt securities to historic levels — a dramatic change from the middle of the decade.
West Palm Beach (HedgeCo.net) – OppenheimerFunds, Inc. and OppenheimerFunds Distributor, Inc. is being investigated by US law firm Hagens Berman Sobol Shapiro for alleged violations of federal securities laws among other things on behalf of investors in the Core Bond Fund.
The "low-risk, conservative bond fund" that invested mainly in high-quality corporate bonds, is alleged to have started acting "like a hedge fund" taking extreme risks including selling risky credit default swaps and other high-risk derivative investments to Wall Street firms.
The Core Bond Fund suffered losses of more than 35% of its value in 2008 and continued to fall another 10% in the first three months of 2009. The Oppenheimer Champion income fund lost more than 80% of the its value, dropping almost $2 billion over the course of 15 months as a result of similar risky investments and deviations from the stated fund investment policy.
Hagens Berman is investigating whether officers and directors of the Core Bond Fund misled investors about the safety of the fund and whether they failed to adequately warn investors when the fund took extreme risks in violation of the Fund’s stated investment policy.
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Montgomery Advertiser – State officials are seeking $36.2 million in damages from OppenheimerFunds Inc., which managed a fund responsible for steep losses in the Oregon College Savings Plan.
Officials said in a statement Monday that risky, "hedge-fund like" investments cost the Oppenheimer Core Bond Fund 36 percent of its value last year — and 10 percent more so far this year.Meanwhile, comparable funds in a benchmark index posted a gain of about 5 percent for 2008, they said.
New York Times Blogs – Officials in Oregon are seeking $36.2 million in damages from OppenheimerFunds, which managed an account responsible for steep losses in the state’s college savings plan.
Officials said in a statement on Monday that risky “hedge-fund like” investments cost the Oppenheimer Core Bond Fund 36 percent of its value last year and 10 percent more so far this year.
Comparable funds in a benchmark index posted a gain of about 5 percent for 2008, they said.
Globe and Mail – The market meltdown has claimed another hedge fund, with Silvercreek Management into workout mode on a convertible bond fund that featured a who’s who of Canadian finance backers.
Silvercreek oversees an estimated $300-million, and ran into trouble in November when the wheels came off the convertible bond market. This debt, which can be flipped into equity, constituted the single worst performing asset class for hedge funds in 2008. That makes converts, as they are known on the Street, the baddest of a very bad lot.
Convertible funds were down an average of 26 per cent last year, according to the U.S. bible for the industry, Absolute Return. The average performance was a loss of just 6.9 per cent.
