Oppenheimer Champion Income Fund Investor Class Action Lawsuit - 03/03/2009
JULY 2011 - According to the Notice:
Securities and Time Period: Champion Income Fund shares purchased or acquired during the period from January 1, 2006 through December 31, 2008, inclusive.
Settlement Fund: $52,500,000 in cash. Your recovery will depend on the amount of shares purchased or acquired (including shares acquired through the reinvestment of dividends) and the timing of those purchases or acquisitions, and any sales. Depending on the number and type of shares of Class Members (defined below) that participate in the settlement and when those shares were acquired and sold, the estimated average recovery will be approximately $0.175 per share using a damages analysis under Section 11 of the Securities Act of 1933 (“Securities Act”) and $0.181 per share using a damages analysis under Section 12 of the Securities Act--assuming that all eligible shares participate in the settlement.
In order to participate, you are required to complete and return the enclosed Proof of Claim form (“Proof of Claim”), listing your Champion Income Fund share purchases, sales, dividend income, and dividend reinvestments between January 1, 2006 and December 31, 2008 and supply supporting documentation. The settlement does not provide for payments regarding Champion Income Fund shares you acquired after December 31, 2008.
Reasons for Settlement: The core of Lead Plaintiffs’ case is that the registration statements and prospectuses issued by the Champion Income Fund during the period between January 1, 2006 and December 31, 2008 (“Disclosure Documents”) allegedly represented the Champion Income Fund as a “diversified portfolio” of high-yield, lower-grade, fixed-income securities that “[did] not involve undue risk.” Lead Plaintiffs allege that the Disclosure Documents misrepresented the riskiness of investments in the Champion Income Fund when Defendants acquired positions in leveraged derivative investments, such as credit default swaps, total return swaps and mortgage-backed securities. As strongly as Lead Plaintiffs and Lead Counsel believed in their case, there were significant risks of pursuing this case to trial. For instance, Defendants: (i) denied having any liability to Lead Plaintiffs or to the members of the Class (defined below) and argued that language in the Disclosure Documents put Class Members on notice of the risks associated with the Champion Income Fund’s investments in derivatives and mortgage-backed securities; (ii) argued that the financial crisis was unprecedented and caught even the most sophisticated financial firms by surprise, thus any undisclosed risks were unforeseeable, no misrepresentations were made, and no statements, acts, or omissions by Defendants were the cause of any harm to Lead Plaintiffs or Class Members; and (iii) disputed the amount of alleged damages and would use their own experts at trial to argue that the alleged damages were not related to the misrepresentations alleged in the case.
FEBRUARY 2009 - On Friday, February 13, 2009 an investor in Oppenheimer Champion Income Fund filed a proposed securities class action lawsuit 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 (MUTF: OPCHX; MUTF: OCHBX; MUTF: OCHCX; MUTF: OCHNX; MUTF: OCHYX) offered by OppenheimerFunds, Inc. between January 26, 2007 and December 9, 2008, including in connection with its January 26, 2007 and January 25, 2008 offerings against Oppenheimer Champion Fund, OppenheimerFunds, Inc and certain of its officers and directors over alleged violations of Federal Securities Laws.
According to the complaint the plaintiff alleges that Oppenheimer Champion Fund, OppenheimerFunds Inc. and certain of its officers and directors violated the Securities Exchange Act of 1934, the Securities Act of 1933 and the Investment Company Act of 1940.The complaint alleges that due to defendants’ positive, but false, statements, investors purchased and/or continued to hold shares in the Fund. 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, so the lawsuit. Beginning in July 2008, the Oppenheimer Champion Fund’s shares declined. 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 and as a result of these disclosures, the price of the Fund’s shares collapsed, so the plaintiff.
Overall, the Fund experienced an 82 percent drop. Compared to other high-yield funds that averaged a drop of 32 percent in 2008, The Champion Fund experienced an almost $2 billion drop in assets in 15 months.