Sparer Law Group has filed the first class action lawsuit on behalf of investors in the Oppenheimer California Municipal Fund. The lawsuit alleges that Oppenheimer misled investors by describing the fund as seeking income "consistent with preservation of capital," while purchasing lower grade bonds concentrated in the real estate industry. The net asset value of the Oppenheimer California Municipal Fund decreased by over 41% in 2008, losing more than $1.1 billion.
San Francisco, CA (PRWEB) February 10, 2009 -- Sparer Law Group has filed the first class action lawsuit on behalf of investors who purchased the Oppenheimer California Municipal Fund (Symbols: OPCAX, OCABX, OCACX) between September 27, 2006 and November 28, 2008. The case was filed on February 4, 2009 in the United States District Court for the Northern District of California, case number C 09-00567 SI.
The lawsuit alleges that the Fund's Registration Statements and Prospectuses misled investors about the Fund's investment objectives and underlying risk by describing the Fund as seeking current income "consistent with preservation of capital." The Fund lost over 41% of its net asset value ("NAV") in 2008. By comparison, the average loss for funds within the same Lipper peer group over this period was only 11.5%.
"The promise that a municipal bond fund follows a strategy designed to preserve capital cannot be just a sales pitch. It has to be reflected in an objective investment approach," said Alan W. Sparer, lead counsel. "Investors put their 'safe' money and retirement savings in muni bonds. These funds are not the place for speculative strategies or junk bond investments."
The lawsuit alleges that the Oppenheimer California Municipal Fund policies and operations ignored the preservation of capital objective by concentrating 78% of its assets in bonds rated at the lowest investment grade or below, and concentrating 60% in bonds that were not rated by any independent rating agency. In addition, 33% of the Fund's investments were placed in Dirt Bonds, which are based on contracts for land developments that have not been built yet and were especially vulnerable to the recent declines in California's real estate market.
In addition, the lawsuit alleges that Oppenheimer failed to disclose that, because of the Fund's overconcentration in lower rated bonds and bonds that had not been rated by any independent agency, there was a significant risk that more than 25% of its assets were in junk bonds, a violation of the Fund's fundamental investment policy.
The NAV of the Oppenheimer California Municipal Fund decreased by more than $1.1 billion in 2008.
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[Via Legal / Law]
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