Oregon State Sues OppenheimerFunds

U.S state of Oregon has sued OppenheimerFunds for USD36 million, claiming the fund acted as a hedge fund, not a mutual fund
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U.S state of Oregon has sued OppenheimerFunds for USD36 million, claiming the fund acted as a hedge fund, not a mutual fund.

The state-sponsored collage savings plans were lost due to lack of disclosure by fund managers. According to Oregon, Oppenheimer fund managers began investing in credit default swaps and other types of derivatives without approval from the State College Plan.

According to the suit the supposedly conservative investments had become a hedge-fund like investment fund that took extreme risks in a search for speculative large returns.”

OppenheimerFunds has refused any accountability and blamed the losses on market turmoil.

According to a Reuters report, an OppenheimerFunds representative said in an e-mailed statement: “The mutual fund cited in the complaint experienced significant losses due to unprecedented market volatility in 2008, as did other mutual funds and investments.”

The suit, filed in Marion County Circuit Court, has charged OppenheimerFunds and two affiliates with negligent misrepresentation, negligence, breach of fiduciary duty, breach of contract and violation of Oregon’s securities laws.

The fund in question lost 35% in 2008, and 10% in the first quarter of 2009.

Earlier in the month, officials in Illinois, Maine, New Mexico, and Texas had also begun to explore whether OppenheimerFunds violated its fiduciary duty to investors.

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