CHICAGO, Jan. 8, 2009 (GLOBE NEWSWIRE) -- Stoltmann Law Offices announces that it has filed a Financial Industry Regulatory Authority (FINRA) arbitration statement of claim yesterday against Oppenheimer Investor Services and the fund manager, Angelo Manioudakis, for investment losses in the Oppenheimer Champion Income Fund (OCHBX, OPCHX and OCHCX). The claim was filed on behalf of an 87 year old retired optometrist and his 84 year old wife and is believed to be the first filed arbitration claim or lawsuit in the country related to the losses sustained by the Oppenheimer Champion Income Fund.
The arbitration statement of claim alleges fraud, deceptive practices, negligence and misrepresentations and omissions related to the Fund's concentration in highly speculative derivative tranches, credit default swaps, total return swaps and other high risk derivatives, according to Chicago securities attorney Andrew Stoltmann, of Stoltmann Law Offices in Illinois. Stoltmann's firm filed the statement of claim with FINRA.
According to attorney Andrew Stoltmann, "The Fund was concentrated in extraordinarily speculative derivatives and other high risk investments. The Fund's marketing material, and even the prospectus, assured investors the fund would be less risky than the typical high income fund. As late as 2008, the prospectus stated 'In selecting securities for the Fund, the overall strategy is to build a broadly diversified portfolio to help moderate the special risks of investing in high-yield debt instruments..The Fund is intended to be a long-term investment and may be appropriate as a part of a retirement plan portfolio.' Given the concentration in credit default swaps and other high risk derivatives, the Fund was not as it was represented to be. Thousands of investors' retirement accounts have been decimated."
According to the complaint, the Champion Income Fund took a massive bet in high risk derivatives in the form of mortgage backed securities, total return swaps and credit default swaps. Total-return swaps are highly illiquid, speculative and complex agreements between parties to exchange cash flows in the future based on how a set of securities perform. Credit default swaps are similar to insurance contracts that protect investors against bond and loan defaults. Specifically, the Fund took a massive gamble that top-rated commercial mortgage-backed securities would rally in 2008.
According to Stoltmann, "Derivatives have been described by Warren Buffet as financial weapons of mass destruction. Derivatives have brought down Orange County, California, Barings Bank, and multiple other bond funds like the Piper Jaffray Institutional Government Income Portfolio in 1993. The SEC and FINRA have repeatedly warned financial institutions about concentrating mutual funds in high risk, speculative derivatives. Yet Oppenheimer thumbed its nose at these warnings and the results for thousands of retirees in Oppenheimer mutual funds have been a financial cataclysm."
Through October of 2008, according to Yahoo Finance, the Oppenheimer Champion Income Fund A Share was ranked 550 out of 562 high income funds. Of the 12 funds that performed worse, almost half were different share types of the Champion Income Fund. When year end results are finalized, the Oppenheimer Fund will likely be dead last.
According to the statement of claim, the Champion Income Fund lost approximately 80% of its value during 2008, with nearly all of those losses occurring in the last 6 months. The fund lost a stunning 55% of its value in November 2008 alone.
The claims seek recovery of investment losses of over $125,000 along with attorney's fees, interest and punitive damages. Stoltmann Law Offices expects to file another 25 claims against Oppenheimer in upcoming weeks and additional claims involving the Oppenheimer Core Bond Fund.
The statement of claim filed by Stoltmann Law Offices does not name the financial advisors who recommended the funds to their clients. According to Mr. Stoltmann, "We are not naming the financial advisors who sold the Fund. We believe the advisors were as misled as the clients who purchased the Fund. The advisors often put their most conservative, risk adverse clients in the Fund. Oppenheimer misled the advisors and the advisor's clients ended up paying the ultimate financial price."
Mr. Stoltmann also warned, "Unfortunately, class action lawyers will likely file class actions lawsuits in the near future. Clients are encouraged to consider all of their legal options. Often, class action settlements are very paltry and the recoveries tend to be small."
More information is available at www.OppenheimerFundFraud.com or www.InvestmentFraud.Pro