case 1:09-cv-01186-jlk document 1 filed 05/22/2009 page 1...
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Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 1 of 27
IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO
Civil Action No.
JULIAN FERGUSON, Individually and On Behalf of All Others Similarly Situated,
Plaintiff,
v.
OPPENHEIMERFUNDS, INC.,OPPENHEIMER INTEGRITY FUNDS,OPPENHEIMER CORE BOND FUND,WILLIAM L. ARMSTRONG,JOHN V. MURPHY,BRIAN W. WIXTED,ROBERT G. AVIS,GEORGE C. BOWEN,EDWARD L. CAMERON,JON S. FOSSEL,SAM FREEDMAN,BEVERLY L. HAMILTON,ROBERT J. MALONE,F. WILLIAM MARSHALL, JR., andOPPENHEIMERFUNDS DISTRIBUTOR, INC.,
Defendants.
CLASS ACTION COMPLAINT FOR VIOLATIONS OFFEDERAL SECURITIES LAWS
JURY TRIAL DEMANDED
NATURE OF THE ACTION
1. This is a class action on behalf of all persons and entities who purchased shares of
the Oppenheimer Core Bond Fund (the “Fund”) on or after April 27, 2007 (the “Class Period”),
and who were damaged thereby. Plaintiff sues under the Securities Act of 1933 (the “Securities
Act”) and the Investment Company Act of 1940 (the “ICA”) in connection with the Fund’s
April 27, 2007 and April 29, 2008 offerings (the “Offerings”).
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2. The Fund was organized as a series of the Oppenheimer Integrity Funds, a
Massachusetts business trust, founded in April 1982. The Trust is an open-end, diversified
management investment company. At all relevant times, the Fund was managed by
OppenheimerFunds. The Fund offers five classes of shares.
3. According to the Fund’s April 27, 2007 and April 29, 2008 Registration
Statements on Form N-1A, Prospectuses and Statements of Additional Information filed with the
Securities and Exchange Commission (collectively the “Prospectuses”), the Fund seeks “total
return,” or “income earned on the Fund’s investments, plus capital appreciation, if any, which
generally arises from decreases in interest rates, improving credit fundamentals for a particular
sector or security, and managing pre-payment risks associated with mortgage-related securities
as well as other techniques.” The Fund claimed that it would strive toward this objective by
investing primarily in investment-grade bonds and United States government securities.
4. Moreover, the Fund promoted itself as appropriate for, and was offered by,
college savings plans, known as 529 plans, in Illinois, Oregon, Texas, Maine and New Mexico.
Additionally, the Fund described itself as being designed “to be a long-term investment” and
appropriate as “a part of a retirement plan portfolio.”
5. In direct conflict with the Fund’s stated investment objective, and without notifying
investors, the Fund altered its investment strategy and began to assume substantially greater levels of
risk than those implicated by the fund’s stated objectives and policies. The Fund dramatically
increased its use of derivative instruments and purchases of highly volatile mortgage-related
securities.
6. The Fund further increased its risk profile, in violation of its stated investment
objectives and policies, by significantly increasing its leverage up to 180% of net assets. The
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Fund borrowed money using the Fund’s assets as collateral and then used the proceeds to pursue
high risk derivative transactions. The use of leverage greatly increased the Fund’s potential loss
by exposing it to the risk of loss on its new investments in addition to loss associated with its
existing asset bases.
7. Moreover, the Fund’s use of off-balance-sheet vehicles to create leverage helped
to conceal from investors the Fund’s full exposure to risky derivatives. Specifically, the Fund
engaged in total return swaps. A total return swap is a financial contract between parties to
exchange cash flows in the future based on the performance of a specified security or group of
securities. In the midst of the severe downturn in the residential real estate market in 2007 and
2008, the Fund entered into swaps related to commercial real estate, speculating that the
commercial real estate market would rally and not suffer the same fate as the residential market.
The risky venture caused the Fund to report substantial declines in its portfolio value as the
market for commercial real estate property massively declined in the Fall of 2008.
8. The Fund concurrently increased its sales of credit default swaps, including
selling credit default swaps tied to companies on the brink of collapse like American
International Group (“AIG”) and Lehman Brothers Holdings Inc. (“Lehman”). Credit default
swaps are insurance contracts that insure against default on debt and equity securities such as
corporate bonds. In a credit default swap, two parties enter into a private contract whereby the
buyer of the protection agrees to pay the seller premiums over a set period of time which is
typically four or five years. In exchange, the seller agrees to pay the buyer in the event a
particular credit crisis occurs such as a default on the underlying securities.
9. Credit default swaps can be sold by either the buyer or the seller. These types of
financial instruments can be used by the buyer of the instrument as a hedge against credit risk. A
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hedge is an investment that is made to reduce or offset the risk associated with another
investment. As for the seller of the instrument, these types of transactions create a certain
amount of credit risk which the seller is willing to assume in exchange for the steady stream of
payments. By entering into derivative and hedging transactions involving companies facing
severe credit and liquidity problems, the Fund assumed extremely high levels of risk which its
investment manager failed to offset and which was concealed from investors.
10. In the wake of the collapse of the subprime mortgage market, the credit default
swap market began to show signs of distress by summer 2007 and into the fall. By early 2008,
the market for credit default swaps had declined significantly. Despite the risks associated with
these types of investments, the Fund not only continued selling swaps in 2007 and 2008, but also
increased its use of them until September 2008 when AIG and Lehman collapsed.
11. After Bear Stearns Companies (“Bear Stearns”) collapsed in mid-March 2008,
rumors began circulating that Lehman faced a similar cash crunch and many Wall Street
observers believed Lehman would be the next investment bank to fail after Bear Stearns. The
concerns and speculations regarding Lehman persisted right up until the company filed for
bankruptcy in September 2008.
12. Likewise, AIG began to report serious problems with its own credit default swaps
in February 2008, writing down billions of dollars in its credit default swap portfolio and posting
the first loss in the Company’s 89-year history. AIG continued reporting substantial losses and
write downs due in significant part to its credit default swaps until it was rescued by the
Government in September 2008.
13. Despite all the questions and concerns regarding Lehman and AIG as well as
credit default swaps themselves, the Fund engaged in selling credit default swaps on Lehman and
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AIG paper through September 2008. These investments were in direct contrast to the Fund’s
stated objectives.
14. Both of these types of swaps (total return swaps and credit default swaps) were
extraordinarily risky. In the end, the swaps exposed the Fund to catastrophic losses.
15. Furthermore, the Fund took on excessive risk by purchasing large amounts of
commercial mortgage-backed securities (“CMBSs”). In the beginning of 2008, the Fund
purchased substantial stakes in mortgage-related bonds tied to commercial real estate despite the
massive deterioration in the subprime market and the overall softening of the real estate market
in 2007. Angelo Manioudakis (“Manioudakis”), Senior Vice President and head of the Core Plus
team that managed the Fund, said that CMBSs accounted for 10% of the Fund’s market value as
of January 2008.
16. By July 2008, the Fund had shed 3.7% of its value. This drop placed the Fund
behind 80% of its category rivals. Equally, by July the Fund had increased its exposure to
nonagency mortgage bonds (commercial and residential) to just over 30% of the Fund’s total
assets.
17. The fact that the Fund had increased its exposure by engaging in highly
speculative and risky transactions in the hopes of higher returns was not disclosed in the Fund’s
Prospectuses. This left investors unaware of these additional risk exposures. Due to defendants’
positive, but false, statements, investors purchased and/or continued to hold shares in the Fund.
18. The true facts which were omitted from the Prospectuses or were known by the
defendants but concealed from the investing public during the Class Period were as follows:
(a) The Fund was no longer adhering to its objective but rather, in an effort to
achieve greater yields, was pursuing riskier instruments;
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(b) The extent of the Fund’s liquidity risk due to the illiquid nature of a large
portion of the Fund’s portfolios was omitted;
(c) The extent of the Fund’s risk exposure to derivatives and other high risk
instruments was concealed; and
(d) The extent of the Fund’s leverage exposure was misstated.
JURISDICTION AND VENUE
19. The claims asserted herein arise under and pursuant to §§11, 12(a)(2) and 15 of
the 1933 Act and §13(a) of the 1940 Act.
20. This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. §1331, §22 of the 1933 Act and §44 of the 1940 Act.
21. Venue is proper in this District pursuant to 28 U.S.C. §1391(b), because many of
the acts and practices complained of herein occurred in substantial part in this District.
22. In connection with the acts alleged in this complaint, defendants, directly or
indirectly, used the means and instrumentalities of interstate commerce, including, but not
limited to, the mails, telephone communications and the facilities of the national securities
exchanges.
PARTIES
23. Plaintiff Julian Ferguson acquired shares of the Fund during the Class Period as
set forth in the accompanying certification, and has been damaged thereby.
24. Defendant OppenheimerFunds is one of the largest asset management companies
in the United States. OppenheimerFunds offers products and services to individuals,
corporations and institutions, including mutual funds, separately managed accounts, investment
management for institutions, hedge fund products, qualified retirement plans and subadvisory
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investment-management services. OppenheimerFunds acts as the Fund’s manager and is
primarily responsible for selecting the Fund’s investments and handling its day-to-day
operations.
25. Defendant Oppenheimer Integrity Funds (the “Trust”) is an open-end,
management investment company registered under the 1940 Act. The Trust was the Registrant
for the Fund’s Offerings.
26. Defendant Core Bond Fund is a mutual fund and a series of Oppenheimer
Integrity Funds. The Core Bond Fund and its trustees are responsible for ensuring that the Fund
complies with its stated objectives. The Core Bond Fund offers five classes of shares. The
Fund’s classes are as follows:
Core Bond Fund Class ACore Bond Fund Class BCore Bond Fund Class CCore Bond Fund Class NCore Bond Fund Class Y
27. Defendant William L. Armstrong (“Armstrong”) is, and at all relevant times was,
Chairman of the Board of Trustees for the Fund. Defendant Armstrong signed or authorized the
signing of the 2007 and 2008 N-1A Registration Statements.
28. Defendant John V. Murphy (“Murphy”) is, and at all relevant times was,
President, Principle Executive Officer and trustee of the Fund. Defendant Murphy signed or
authorized the signing of the 2007 and 2008 N-1A Registration Statements.
29. Defendant Brian W. Wixted (“Wixted”) is, and at all relevant times was,
Treasurer and Principal Financial & Accounting Officer of the Fund. Defendant Wixted signed
or authorized the signing of the 2007 and 2008 N-1A Registration Statements.
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30. Defendant Robert G. Avis (“Avis”) was at all relevant times, a trustee of the
Fund. Defendant Avis signed or authorized the signing of the 2007 N-1A Registration
Statement.
31. Defendant George C. Bowen (“Bowen”) is, and at all relevant times was, a trustee
of the Fund. Defendant Bowen signed or authorized the signing of the 2007 and 2008 N-1A
Registration Statements.
32. Defendant Edward L. Cameron (“Cameron”) is, and at all relevant times was, a
trustee of the Fund. Defendant Cameron signed or authorized the signing of the 2007 and 2008
N-1 A Registration Statements.
33. Defendant Jon S. Fossel (“Fossel”) is, and at all relevant times was, a trustee of
the Fund. Defendant Fossel signed or authorized the signing of the 2007 and 2008 N-1A
Registration Statements.
34. Defendant Sam Freedman (“Freedman”) is, and at all relevant times was, a trustee
of the Fund. Defendant Freedman signed or authorized the signing of the 2007 and 2008 N-1A
Registration Statements.
35. Defendant Beverly L. Hamilton (“Hamilton”) is, and at all relevant times was, a
trustee of the Fund. Defendant Hamilton signed or authorized the signing of the 2007 and 2008
N-1 A Registration Statements.
36. Defendant Robert J. Malone (“Malone”) is, and at all relevant times was, a trustee
of the Fund. Defendant Malone signed or authorized the signing of the 2007 and 2008 N-1A
Registration Statements.
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37. Defendant F. William Marshall, Jr. (“Marshall”) is, and at all relevant times was,
a trustee of the Fund. Defendant Marshall signed or authorized the signing of the 2007 and 2008
N-1 A Registration Statements.
38. The defendants referenced above in ¶¶27-37 are referred to herein as the
“Individual Defendants.”
39. Defendant OppenheimerFunds Distributor, Inc. (the “Distributor”) acted as the
distributor of the Fund and is an affiliate of OppenheimerFunds. The Distributor acted as an
underwriter in the sale of the Fund in connection with the Offerings, helping to draft and
disseminate the offering documents.
CLASS ACTION ALLEGATIONS
40. Plaintiff brings this action as a class action pursuant to Federal Rule of
Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons or entities who
acquired shares of the Fund traceable to the false and misleading Prospectuses for the Offerings,
or purchased or held the shares during the Class Period, and who were damaged thereby (the
“Class”). Excluded from the Class are defendants, the officers and trustees of the
OppenheimerFunds, the Fund or any of the other defendants, and at all relevant times, members
of their immediate families and their legal representatives, heirs, successors or assigns and any
entity in which defendants have or had a controlling interest.
41. The members of the Class are so numerous that joinder of all members is
impracticable. The Fund’s shares were actively traded in an efficient market. While the exact
number of Class members is unknown to Plaintiff at this time and can only be ascertained
through appropriate discovery, Plaintiff believes that there are hundreds of members in the
proposed Class with thousands of outstanding shares. Record owners and other members of the
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Class may be identified from records maintained by the OppenheimerFunds or its transfer agent
and may be notified of the pendency of this action by mail, supplemented (if deemed necessary
or appropriate by the Court) by published notice.
42. Plaintiff’s claims are typical of the claims of the members of the Class as all
members of the Class are similarly affected by defendants’ wrongful conduct in violation of
federal law that is complained of herein.
43. Plaintiff will fairly and adequately protect the interests of the members of the
Class and has retained counsel competent and experienced in class and securities litigation.
44. Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among the
questions of law and fact common to the Class are:
(a) whether the 1933 Act was violated by defendants’ acts as alleged herein;
(b) whether the 1940 Act was violated by defendants’ acts as alleged herein;
(c) whether statements made by defendants to the investing public in the
Prospectus misrepresented material facts about the business, operations and management of the
OppenheimerFunds or the Fund; and
(d) to what extent the members of the Class have sustained damages and the
proper measure of damages.
45. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
the damages suffered by individual Class members may be relatively small, the expense and
burden of individual litigation make it impossible for members of the Class to individually
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redress the wrongs done to them. Additionally, there will be no difficulty in the management of
this action as a class action.
SUBSTANTIVE ALLEGATIONS
46. On April 27, 2007, the Fund filed with the SEC a Registration Statement on Form
N-1A, a Prospectus and Statement of Additional Information (collectively the “April 2007
Prospectus”). The April 2007 Prospectus emphasized that “the Fund is intended as a long-term
investment... and may be appropriate for a part of an investor’s retirement plan portfolio.”
47. The April 2007 Prospectus was negligently prepared and, as a result, contained
untrue statements of material facts or omitted to state other facts necessary to make the
statements made not misleading and was not prepared in accordance with the rules and
regulations governing its preparation.
48. The April 2007 Prospectus represented the following about the Fund’s business
and operations:
ABOUT THE FUND
The Fund’s Investment Objective and Principal Investment Strategies
WHAT ARE THE FUND’S INVESTMENT OBJECTIVES? The Fund seekstotal return by investing mainly in debt instruments.
WHAT DOES THE FUND MAINLY INVEST IN? As a non-fundamental policy(which will not be changed without providing 60 days' notice to Fundshareholders), under normal market conditions, the Fund invests at least 80% ofits net assets (plus borrowings for investment purposes) in investment grade debtsecurities. Those investment-grade debt securities can include:
• domestic and foreign corporate debt obligations,• domestic and foreign government bonds, including U.S.
government securities, and
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• mortgage-related securities (including collateralized mortgageobligations (“CMOs”)) issued by private issuers. The Fund can alsouse derivative instruments, including futures, swaps, CMOs and“structured” notes, to seek higher investment returns or to manageinvestment risks. These investments are more fully explained in“About the Fund’s Investments”, below:
There is no set allocation of the Fund’s assets among the classes of securities theFund buys, but the Fund focuses mainly on U.S. government securities andinvestment-grade debt securities. However, if market conditions change, theFund’s portfolio managers might change the relative allocation of the Fund’sassets.
The Fund seeks to maintain an average effective portfolio duration (discussed in“About the Fund’s Investments”, below) of three to six years (measured on adollar-weighted basis) to try to reduce the volatility of the value of its securitiesportfolio. The Fund has no limitations on the range of maturities of the debtsecurities in which it can invest and therefore may hold bonds with short, mediumor long-term maturities. Because of market events and interest rate changes, theduration of the portfolio might not meet that target at all times. The Fund’sinvestment manager, OppenheimerFunds, Inc. (the “Manager”), will attempt tomaintain the overall weighted average credit quality of the portfolio at a rating of“A-” (or equivalent) or higher from any nationally recognized credit ratingorganization.
HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TOBUY OR SELL? In selecting securities for the Fund, the Fund’s portfoliomanagers analyze the overall investment opportunities and risks in differentsectors of the debt securities markets by focusing on business cycle analysis andrelative values between the corporate and government sectors. The portfoliomanagers’ overall strategy is to build a broadly diversified portfolio of corporateand government bonds. The portfolio managers currently focus on the factorsbelow (which may vary in particular cases and may change over time), lookingfor:
• Debt securities in market sectors that offer attractive relative value,• Investment-grade securities that offer more income than U.S. treasury
obligations with a good balance of risk and return,• High income potential from different types of corporate and
government securities, and• Broad portfolio diversification to help reduce the volatility of the
Fund’s share prices.
The portfolio managers monitor individual issuers for changes in the factors aboveand these changes may trigger a decision to sell a security. Generally, the “total
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return” sought by the Fund consists of income earned on the Fund’s investments,plus capital appreciation, if any, which generally arises from decreases in interestrates, improving credit fundamentals for a particular sector or security, andmanaging pre-payment risks associated with mortgage-related securities, as well asother techniques.
WHO IS THE FUND DESIGNED FOR? The Fund is designed for investorsseeking total return from a fund that invests primarily in investment-grade debtsecurities but which can also hold high-yield, below investment grade debtsecurities. Those investors should be willing to assume the credit risks of a fundthat typically invests a significant amount of its assets in corporate-debt securities,and the changes in share prices that can occur when interest rates change. TheFund is intended as a long-term investment, not a short-term trading vehicle, andmay be appropriate for a part of an investor’s retirement plan portfolio. The Fundis not a complete investment program.
49. The April 2007 Prospectus stated that the Fund’s “[fJundamental policies cannot
be changed without the approval of a majority of the Fund’s outstanding voting shares. The
Fund’s investment objective is a fundamental policy.”
50. Consistent with the Fund’s investment objective of seeking total return, the April
2007 Prospectus represented that:
The Manager tries to reduce risks by carefully researching securities before theyare purchased. The Fund attempts to reduce its exposure to market risks bydiversifying its investments, that is, by not holding a substantial amount ofsecurities of any one issuer and by not investing too great a percentage of theFund’s assets in any one company. Also, the Fund does not concentrate 25% ormore of its investments in any one industry.
51. While acknowledging some risks associated with investing in the Fund, the April
2007 Prospectus emphasized the conservative nature of the Fund: “the Fund’s emphasis on
investment-grade securities may make its share prices less volatile than high-yield bond funds or
funds that focus on foreign bonds.”
52. On April 29, 2008, the Fund filed with the SEC a Registration Statement on Form
N-1A, a Prospectus and Statement of Additional Information (collectively the “April 2008
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Prospectus”). The April 2008 Prospectus contained substantially similar statements concerning
the Fund’s objectives and principal investment strategies as contained in the April 2007
Prospectus.
53. The Prospectuses were negligently prepared and, as a result, contained untrue
statements of material facts or omitted to state other facts necessary to make the statements made
not misleading and were not prepared in accordance with the rules and regulations governing
their preparation. The true facts which were misstated in or omitted from the Prospectuses
included that:
(a) The Fund was no longer adhering to its objective but rather, in an effort to
achieve greater yields, was pursuing riskier instruments;
(b) The extent of the Fund’s liquidity risk due to the illiquid nature of a large
portion of the Fund’s portfolios was omitted;
(c) The extent of the Fund’s risk exposure to derivatives and other high risk
instruments was omitted; and
(d) The extent of the Fund’s leverage exposure was omitted.
54. On December 12, 2008, Senior Vice President of OppenheimerFunds,
Manioudakis, who headed the Core Plus team, resigned from his position. During the relevant
period, the Core Plus team managed more than $16 billion in individual investor fund assets,
including the Fund.
55. For the year ended December 16, 2008, the Fund had lost a staggering 37.6%,
which was 31 percentage points worse than its typical intermediate-term bond rival’s loss.
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56. On December 17, 2008, Mornignstar declared that “[w]e’ve lost confidence in
Oppenheimer Core Bond.” The article stated, in pertinent part:
In the past, we were optimistic that the managers’ conviction in the fund’s high-quality mortgage holdings would eventually pay off, but we’ve becomeincreasingly concerned about the magnitude of their bets. In particular, the team’sliberal use of swaps to gain exposure to corporates and CMBS has made mattersfar worse. The market for CMBS total-return swaps, for example, seized up inthe wake of September’s financial sector upheaval. Meanwhile, those CMBSswaps, the corporate swaps, and the fund’s other holdings added up to creditmarket exposure well beyond the dollar value of the fund’s net assets, amplifyingthe impact of losses on the overall outcome.
The managers have since replaced many CMBS contracts with bonds, but itsupsetting that they didn’t anticipate the dangers of the fund’s derivative positionsin this dysfunctional market. And it’s unacceptable that the firm hasn’t moreclearly communicated the fund’s exposure to various sectors and risks inshareholder reports and web commentary.
57. Also on December 17, 2008, Morningstar released an article entitled
“Oppenheimer Bond Funds Missed the Forest Fire for the Trees” detailing the significant
problems at the Core Bond Fund. 1
What’s been going on with Oppenheimer’s bond funds has been so unbelievablethat, well, we didn’t believe it. We’ll get back to that in a minute.
* * *
Even with 2008’s ugly market, we don’t need any benchmarks to know thatneither [the Core Bond Fund nor the Champion Income Fund] are anywhere nearthe market averages.
Bad Markets, Bad Returns
At first blush, the cause seems logical enough. Manioudakis and his team tried tokeep powder dry in mid-2007, figuring that good opportunities were going topresent themselves. By January 2008, the team had begun packing some of thatpowder, building positions in four key areas that they felt had becomeexceedingly cheap. That included AAA rated commercial mortgage-backedsecurities, nonagency prime (jumbo) mortgages, AA and A rated financial-sector
1 All emphasis in this article is original.
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corporate bonds, and very short-maturity high-yield corporates. As we all knowby now, the market only got worse and became more illiquid through the courseof the year. Each of those areas has been pummeled mercilessly.
Something just didn’t add up for us, though. In January, Manioudakis toldMorningstar that CMBS consumed 10% of the Core Bond Fund’s “absolutemarket value.” But as badly as the sector performed--The Barclays (nee Lehman)CMBS Index fell 27.4%--that alone couldn’t possibly explain the portfolio’soverall loss of nearly 39% as of Monday. Ditto for the other sectors, even thoughthey lost a lot, as well.
Not 10 ... This One Goes to 11
We had some suspicions about the portfolios’ exposures, which weren’tconfirmed for us by Oppenheimer until now. It turns out that when Manioudakisand the crew decided that the four areas they identified were undervalued, theyreally decided.
By the end of March, the Core portfolio carried around $400 million in securitiesexceeding its (then) $2.2 billion in net assets via transactions that were effectivelyakin to margin borrowing. It also had roughly $800 million in long exposure tocorporate credit via default swaps—including American International Group(AIG), Lehman Brothers, Wachovia (WB), Washington Mutual, and BearStearns--and around $600 million in total return swap exposure to a volatile sliceof Barclays’ AAA rated CMBS index, all of which by normal reportingconvention were not included on the fund’s balance sheet and thus not in its netassets. By the end of September, just before the Treasury Department’s TroubledAsset Relief Program proposal and right around the time the market sailed off intouncharted mania, Core Bond’s credit exposure to those various markets totaledmore than 180% of net assets on a dollar basis. In other words, for every dollar ofshareholder capital in the fund, it was exposed to the credit-driven movement ofmore than $1.80 worth of securities.
* * *
...there is just no getting around the fact that the extra layers of market exposurewere piled high.
I’m Sorry, I Couldn’t Hear That. Would You Speak Up?
Left there, things would have been plenty bad enough. But they weren’t. Becausemost of the additional market exposure came from off-balance-sheet derivatives,the funds’ portfolios didn’t look highly leveraged. And while they may have beenonly somewhat leveraged in what we might call a conventional accounting sense--by borrowing money against your net assets and investing it--they were heavily
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leveraged as mutual funds go, in an economic sense. ...And because the managerswere careful to control interest-rate risk, in part through futures and swaps, and inpart by taking on only credit exposure with their off-balance-sheet derivatives,they may not have really thought of their funds as heavily leveraged.
To the degree it existed, that thinking was erroneous, and it’s very disappointingthat the team didn’t internalize just how much risk it was taking. ... [The Fundmanager] failed to model or plan for the possibility of severe downturns and thusfor how they could turn the equivalent of a discarded cigarette into a raginginferno.
The only thing worse than levering up a portfolio with 180% market exposure,though, is doing it quietly. I’d like to be wrong about this, but I can’t imagine thatthe average shareholder or advisor with a stake in these funds knew that they wereleveraged in any way. The word itself doesn’t seem to be linked to any of thefunds’ strategies anywhere I’ve searched on Oppenheimer’s Web site or in any ofthe supporting shareholder or marketing materials that we’ve seen. Terminologyaside, none of the portfolio descriptors provides enough information to estimatethose market exposures, much less know that they’re not typical, 100 cents in,100 cents invested. There’s just no indication whatsoever that anything is unusualabout any of the funds that employ this kind of leveraged exposure. And it wasnever brought up by Oppenheimer managers in any of their recent Morningstaranalyst interviews.
* * *
How is it possible that a shareholder can go to its Web site, see that Core Bond isdown nearly 40%, or 80% in the case of Champion Income, and yet find noinformation to use to figure out why, much less an actual explanation?
* * *
I’m sorry to be glib, but this strains credulity. Here’s a news flash, Oppenheimer:If your funds are going to use instruments that involve this much portfoliocomplexity, you have a duty to translate and simplify what that means for yourshareholders. Not doing so is patently unacceptable and comes awfully close todishonesty by omission. While most of your competitors haven’t taken onanywhere near this much risk, many use similar portfolio techniques and are justas guilty of these omissions. I can think of numerous ways this can all happenwithout intent, but we’re way past the honeymoon period now that these toolshave been around for quite a while. It’s time for this to stop all around.
* * *
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... it seems that Manioudakis and his crew were overly focused on trees thatappeared to be incredible bargains. They backed up all of their trucks and evenused a few of their neighbors’. Sadly, it seems that they couldn’t see that theforest was on fire.
58. On February 5, 2009, Morningstar again reported on the Fund in an article
entitled “Fund Companies Falling Short on Stewardship.” The article provided in part:
If you step back and think about it, it’s not hard to be a good steward of capital.Mutual funds simply have to care for fundholders’ capital the same way they’dwant their own money to be run: with sensible strategies, fair prices, andreasonable, straightforward explanations as to why things go well – and not sowell.
Some funds – those that receive As for corporate culture as part of Morningstar’sStewardship Grades for funds, for example – seem to have an easy time puttingshareholders first. But other firms have apparently lost sight of their mission.What follows are examples of recent fund moves that are disrespectful to theshareholders they’re serving.
* * *
Hypocrisy Stings Oppenheimer
In May 2006, John Murphy, president of OppenheimerFunds, gave the welcomingremarks to the annual ICI General Membership Meeting. . . The theme was“Creating Shareholder Value” and two of his suggestions were a) “Offeringcompetitive investment returns at an appropriate level of risk,” and b) “Supplyingclear, concise, and relevant information and tools that investors need to makeinformed investment decisions.”
We wish Murphy had followed his own advice. In 2008, Oppenheimer ChampionIncome lost a nearly inconceivable 78% and sibling Core Bond declined 36%,primarily because the bond funds took on plenty of risk. Specifically, themanagers bought complex, off-balance-sheet swap contracts that created aleveraging effect on the funds. When the market for both bonds and thederivatives became increasingly illiquid as the credit crisis unfolded, the funds gotslammed. Not only did the managers fail to appreciate the risks they were taking,but Oppenheimer also did a terrible job communicating the risks of this exposurein shareholder reports and Web commentary. Longtime fixed-income head JerryWebman has stepped in to try and right the ship at both offerings, but the damagehas already been done.
18
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 19 of 27
COUNT IViolations of §11 of the 1933 Act
Against All Defendants
59. Plaintiff repeats and realleges each and every allegation contained above. For
purposes of this Count, Plaintiff expressly excludes and disclaims any allegation that could be
construed as alleging fraud or intentional or reckless misconduct, as this Count is based solely on
claims of strict liability and/or negligence under the Securities Act. Plaintiff does not allege that
the Individual Defendants or the other defendants had scienter or fraudulent intent, which are not
elements of a § 11 claim.
60. This Count is brought pursuant to §11 of the 1933 Act, 15 U.S.C. §77k, on behalf
of the Class, against all defendants.
61. The Prospectuses were inaccurate and misleading, contained untrue statements of
material facts, omitted to state other facts necessary to make the statements made not misleading,
and omitted to state material facts required to be stated therein.
62. The Trust is the registrant for the Offerings. The defendants named herein were
responsible for the contents and dissemination of the Prospectuses.
63. As issuer of the shares, the Trust is strictly liable to Plaintiff and the Class for the
misstatements and omissions.
64. Each of the defendants was responsible for the contents and dissemination of the
Prospectuses but none of the defendants named herein made a reasonable investigation or
possessed reasonable grounds for the belief that the statements contained in the Prospectuses
were true, without omissions of any material facts and were not misleading.
65. By reasons of the conduct herein alleged, each defendant violated, and/or
controlled a person who violated, § 11 of the 1933 Act.
19
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 20 of 27
66. Plaintiff acquired Fund shares pursuant or traceable to the Prospectuses for the
Offerings.
67. Plaintiff and the Class have sustained damages. The value of the Fund’s shares
has declined subsequent to and due to defendants’ violations.
68. At the time of their purchases of the Fund’s shares, Plaintiff and other members of
the Class were without knowledge of the facts concerning the wrongful conduct alleged herein
and could not have reasonably discovered those facts. Less than one year has elapsed from the
time that Plaintiff discovered or reasonably could have discovered the facts upon which this
complaint is based to the time that Plaintiff filed this complaint. Less than three years has
elapsed between the time that the securities upon which this Count is brought were offered to the
public and the time Plaintiff filed this complaint.
COUNT IIViolations of §12(a)(2) of the 1933 Act Against
Defendants OppenheimerFunds, the Trust, the Fund and the Distributor
69. Plaintiff repeats and realleges the allegations set forth above as if set forth fully
herein. For purposes of this Count, Plaintiff expressly excludes and disclaims any allegation that
could be construed as alleging fraud or intentional or reckless misconduct, as this Count is based
solely on claims of strict liability and/or negligence under the Securities Act.
70. This Count is brought pursuant to § 12(a)(2) of the 1933 Act on behalf of the
Class, against defendants OppenheimerFunds, the Trust, the Fund and the Distributor.
71. This Count does not sound in fraud. Plaintiff does not allege that the defendants
had scienter or fraudulent intent, which are not elements of this claim.
72. These defendants were sellers and offerors and/or solicitors of purchasers of the
shares offered pursuant to the Prospectuses.
20
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 21 of 27
73. The Prospectuses contained untrue statements of material facts, omitted to state
other facts necessary to make the statements made not misleading, and omitted to state material
facts required to be stated therein. The actions of solicitation of the defendants named in this
claim included participating in the preparation of the false and misleading Prospectuses and
participating in marketing the Fund to investors.
74. These defendants owed to the purchasers of the Fund’s shares, including Plaintiff
and other Class members, the duty to make a reasonable and diligent investigation of the
statements contained in the Prospectuses, to ensure that such statements were true and that there
was no omission to state a material fact required to be stated in order to make the statements
contained therein not misleading. Defendants, in the exercise of reasonable care, should have
known of the misstatements and omissions contained in the offering materials as set forth above.
75. Plaintiff and other members of the Class purchased or otherwise acquired shares
of the Fund pursuant to and/or traceable to the defective Prospectuses.
76. By reason of the conduct alleged herein, these defendants violated, and/or
controlled a person who violated, § 12(a)(2) of the 1933 Act. Accordingly, Plaintiff and
members of the Class who hold Fund shares purchased in the Offerings have the right to rescind
and recover the consideration paid for their Fund shares, with interest, and hereby elect to
rescind and tender their Fund shares to the defendants sued herein. Plaintiff and Class members
who have sold their shares in the Fund are entitled to recessionary damages.
COUNT IIIViolations of §15 of the 1933 Act
Against Individual Defendants, the Trust and OppenheimerFunds
77. Plaintiff repeats and realleges each and every allegation contained above. For
purposes of this Count, Plaintiff expressly excludes and disclaims any allegation that could be
21
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 22 of 27
construed as alleging fraud or intentional or reckless misconduct, as this Count is based solely on
claims of strict liability and/or negligence under the Securities Act.
78. This Count is brought pursuant to § 15 of the 1933 Act against the Individual
Defendants, the Trust and OppenheimerFunds.
79. This Count does not sound in fraud. Plaintiff does not allege that the Individual
Defendants or the other defendants had scienter or fraudulent intent, which are not elements of
this claim.
80. Each of the Individual Defendants was a control person of the Fund by virtue of
his or her position as a trustee and/or senior officer of the Fund. The Individual Defendants each
had a series of direct and/or indirect business and/or personal relationships with other trustees
and/or officers and/or major shareholders of the Fund.
81. The Trust was a control person of the Fund because the Fund was a series of the
Trust and the Trust acted as the registrant for the Fund’s Offerings.
82. Each of the Individual Defendants, the Trust and OppenheimerFunds were
culpable participants in the violations of § 11 of the 1933 Act alleged in the Count above, based
on their having signed or authorized the signing of the Prospectuses and having otherwise
participated in the process which allowed the Offering to be successfully completed.
COUNT IVViolations of §13(a) of the 1940 Act
Against Defendants OppenheimerFunds, the Trust and the Fund
83. Plaintiff repeats and realleges each of the allegations set forth above as if fully set
forth herein.
84. This Count is asserted against OppenheimerFunds, the Trust and the Fund for
violations of §13 (a) of the 1940 Act.
22
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 23 of 27
85. The stated investment objective of the Fund was to seek total return.
86. OppenheimerFunds and the Fund did not obtain authorization from a majority of
the Fund’s outstanding voting shareowners prior to deviating from the Fund’s investment policy
with respect to its objective. This deviation exposed investors to increased risk.
87. This deviation ultimately led to losses for the Fund’s investors.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays for relief and judgment, as follows:
A. Determining that this action is a proper class action and certifying Plaintiff as
Class representative under Rule 23 of the Federal Rules of Civil Procedure;
B. Awarding compensatory damages in favor of Plaintiff and the other Class
members against all defendants, jointly and severally, for all damages sustained as a result of
defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;
C. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in
this action, including counsel fees and expert fees;
D. Awarding rescission or a rescissionary measure of damages; and
E. Such equitable/injunctive or other relief as deemed appropriate by the Court.
Dated: May 22, 2009 Respectfully submitted,
SHERMAN & HOWARD L.L.C.
By: s/ Peter G. Koclanes Gordon W. Netzorg ([email protected] )Peter G. Koclanes ([email protected] )633 17th Street, Suite 3000Denver, Colorado 80202Telephone: (303) 297-2700Facsimile: (303) 298-0940
and
23
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 24 of 27
GIRARD GIBBS LLP
Daniel C. Girard ([email protected])Jonathan K. Levine * ([email protected])Aaron M. Shenin* ([email protected])Regina A. Sandler* ([email protected])601 California Street, 14th FloorSan Francisco, CA 94108Telephone: (415) 981-4800Facsimile: (415) 981-4846
COUNSEL FOR INDIVIDUAL ANDREPRESENTATIVE PLAINTIFF JULIAN FERGUSON
* Not yet admitted in the District of Colorado.
24
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 25 of 27
CERTIFICATION OF PROPOSED LEAD PLAINTIFFPURSUANT TO THE FEDERAL SECURITIES LAWS
I, Julian Ferguson, declare the following as to the claims asserted, or to be
asserted, under the federal securities laws:
1. I have reviewed the complaint against Oppenheimer Core Bond Fund and
others prepared by Girard Gibbs LLP, whom I designate as my counsel in this action for
all purposes.
2. 1 did not acquire any shares of the Oppenheimer Core Bond Fund at the
direction of Girard Gibbs LLP or in order to participate in any private action under the
federal securities laws.
3. I am willing to serve as a lead plaintiff either individually or as part of a
group. I understand that a lead plaintiff is a representative party who acts on behalf of
other class members in directing the litigation, and whose duties may include testifying atI
deposition or trial.i
4. I will not accept any payment for serving as a representative party beyond
my pro rata share of any recovery, except reasonable costs and expenses, such as lost
wages and travel expenses, directly related to the class representation, as ordered or
approved by the Court pursuant to law.
5. 1 have not sought to serve or served as a representative party for a class in
an action under the federal securities laws within the past three years.
5. 1 understand that this is not a claim form, and that my ability to share in
any recovery as a class member is not affected by my decision to serve as a representative
Party 3
1
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 26 of 27
7. My purchases and sates of shares of the Oppenheimer Core Bond Fund
during the class period are listed in Attachment A to this document.
8. I declare under penalty of perjury that the foregoing is true and correct.
Executed this day of May, 2009.
j ray,;',Ferguson
2
Case 1:09-cv-01186-JLK Document 1 Filed 05/22/2009 Page 27 of 27
ATTACHMENT A
JULIAN FERGUSON'S TRANSACTIONS INOPPENHEIMER CORE BOND FUND (OPIGX), DURING THE CLASS PERIOD
TRADE AMOUNT PRICE PER NUMBER PURCHASE ORDATE INVESTED SHARE OFSHARES SALE
3/11/08 $25,831.30 $9.34 2,765.664 PURCHASE
1/30109 $127.41 $5.79 22.005 PURCHASE
2/27/09 $122.31 $5.33 22.947 PURCHASE
3/10109 $15,340.42 $5.17 2,967.199 SALE
Case 1:09-cv-01186-JLK Document 1-2 Filed 05/22/2009 Page 1 of 2
'^JS 44 (Rev. 12/07) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required bylaw, except as providedby local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiatingthe civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)
I. (a) PLAINTIFFS DEFENDANTS
JULIAN FERGUSON, Individually and OnBehalf ofAll Others Similarly SEE ATTACHED
(bj JCon tya'o7Kesdidence of First Listed Plaintiff S to f f ord (VA County of Residence of First Listed Defendant(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY):
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE
LAND INVOLVED.
(C) Attorney's (Firm Name, Address, and Telephone Number) Attorneys (If Known)
SEE ATTACHED
II. BASIS OF JURISDICTION (Place an "X" in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an °X" in one Box for Plaintiff(For Diversity Cases Only) and One Box for Defendant)
q 1 U.S. Government X^X3 Federal Question PTF DEF PTT DEFPlaintiff (U.S. Government Not a Party) Citizen of This State q 1 q 1 Incorporated or Principal Place q 4 q 4
of Business In This State
q 2 U.S. Government q 4 Diversity Citizen of Another State q 2 q 2 Incorporated and Principal Place q 5 q 5Defendant
of Business In Another State(Indicate Citizenship of Parties in Item ill)
Citizen or Subject of a q 3 q 3 Foreign Nation q 6 q 6Foreign Country
IV. NATURE OF SUIT (Place an °X° in One Box Only) CONTRACT TORTSOUPEITUREMENALTY S'ANKRUPTCY OTRER STATUTES
q 110 Insurance PERSONAL INJURY PERSONAL INJURY q 610 Agriculture q 422 Appeal 28 USC 158 q 400 State Reapportionmentq 120 Marine q 310 Airplane q 362 Personal Injury - q 620 Other Food & Drug q 423 Withdrawal q 410 Antitrustq 130 Miller Act q 315 Airplane Product Mod. Malpractice O 625 Drug Related Seizure 28 USC 157 q 430 Banks and Bankingq 140 Negotiable Instrument Liability O 365 Personal Injury - of Property 21 USC 881 q 450 Commerceq 150 Recovery of Overpayment O 320 Assault, Libel & Product Liability q 630 Liquor Laws PROPERTY'RIGHTSI q 460 Deportation
& Enforcement of Judgment Slander q 368 Asbestos Personal q 640 R.R. & Truck q 820 Copyrights q 470 Racketeer Influenced andq 151 Medicare Act q 330 Federal Employers' Injury Product q 650 Airline Regs. q 830 Patent Corrupt Organizationsq 152 Recovery of Defaulted Liability Liability q 660 Occupational q 840 Trademark q 480 Consumer Credit
Student Loans q 340 Marine PERSONAL PROPERTY Safety/Health q 490 Cable/Sat TV(Excl. Veterans) q 345 Marine Product q 3700ther Fraud q 690 Other q 810 Selective Service
q 153 Recovery of Overpayment Liability q 371 Truth in Lending TABOR SOCIAL SECURITY YX 850 Securities/Commodities/of Veteran's Benefits q 350 Motor Vehicle q 380 Other Personal 7 710 Fair Labor Standards q 861 HIA (1395ff) Exchange
q 160 Stockholders' Suits q 355 Motor Vehicle Property Damage Act q 862 Black Lung (923) q 875 Customer Challengeq 190 Other Contract Product Liability q 385 Property Damage q 720 Labor/Mgmt. Relations O 863 DIW C/DIW W (405(g)) 12 USC 3410q 195 Contract Product Liability q 360 Other Personal Product Liability q 730 Labor/Mgmt.Reporting q 864 SSID Title XVI q 890 Other Statutory Actionsq 196 Franchise Injury & Disclosure Act q 865 RSI (405(g)) q 891 Agricultural Acts
I ' , REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS q 740 Railway Labor Act FEDERAL TAX SUITS q 892 Economic Stabilization Actq 210 Land Condemnation q 441 Voting q 510 Motions to Vacate O 790 Other Labor Litigation q 870 Taxes (U.S. Plaintiff q 893 Environmental Mattersq 220 Foreclosure q 442 Employment Sentence q 791 Empl. Rot. Inc. or Defendant) q 894 Energy Allocation Actq 230 Rent Lease & Ejectment q 443 Housing/ Habeas Corpus: Security Act q 871 IRS—Third Party q 895 Freedom of Informationq 240 Torts to Land Accommodations q 530 General 26 USC 7609 Actq 245 Tort Product Liability q 444 Welfare q 535 Death Penalty IMMIGRATION q 900Appeal of Fee Determinationq 290 All Other Real Property q 445 Amer. w/Disabilities - q 540 Mandamus & Other q 462 Naturalization Application Under Equal Access
Employment q 550 Civil Rights q 463 Habeas Corpus - to Justiceq 446 Amer. w/Disabilities - q 555 Prison Condition Alien Detainee q 956 Constitutionality of
Other q 465 Other Immigration State Statutesq 440 Other Civil Rights Actions
V. ORIGIN (Place n "X" in One Box Only) Appeal to DistrictTransferred from Judge fromXR 1 Original Q 2 Removed from Q 3 Remanded from 0 4 Reinstated or O 5 another district 0 6 Multidistrict O 7 Magistrat eProceeding State Court Appellate Court Reopened (specify) Litigation Judgment
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): 933 Securities
VI. CAUSE OF ACTION Nctp§ 1 (a 1 1 13 aBrief escription of cause:
Securities Class Action VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER F.R.C.P. 23 JURY DEMAND: XXJYes 0 N
DATE SIGNATURE OF ATTORN Y O ECORD--
5z^--o9 FOR OFFICE USE ONLY
RECEIPT H AMOUNT APPLYING 1FP JUDGE MAG. JUDGE
Case 1:09-cv-01186-JLK Document 1-2 Filed 05/22/2009 Page 2 of 2
CIVIL COVER SHEET ATTACHMENT:
I. (c) Plaintiffs Attorney's Firm Name, Address and Telephone Number:
Gordon W. Netzorg ([email protected])Peter G. Koclanes ([email protected])SHERMAN & HOWARD L.L.C.633 17th Street, Suite 3000Denver, Colorado 80202Telephone: (303) 297-2700Facsimile: (303) 298-0940
and
Daniel C. Girard ([email protected])Jonathan K. Levine* ([email protected])Aaron M. Shenin* ([email protected] )Regina A. Sandler* (rasngirardgibbs.com )GIRARD GIBBS LLP601 California Street, 14th FloorSan Francisco, CA 94108Telephone: (415) 981-4800Facsimile: (415) 981-4846
* Not yet admitted in the District of Colorado.
Defendants:
OPPENHEIMERFUNDS, INC.,OPPENHEIMER INTEGRITY FUNDS,OPPENHEIMER CORE BOND FUND,WILLIAM L. ARMSTRONG,JOHN V. MURPHY,BRIAN W. WIXTED,ROBERT G. AVIS,GEORGE C. BOWEN,EDWARD L. CAMERON,JON S. FOSSEL,SAM FREEDMAN,BEVERLY L. HAMILTON,ROBERT J. MALONE,F. WILLIAM MARSHALL, JR., andOPPENHEIMERFUNDS DISTRIBUTOR, INC.
Case 1:09-cv-01186-JLK Document 1-3 Filed 05/22/2009 Page 1 of 1
Court Name: U.S. District Court, Colorad0Division: 1Receipt Number: COX019120
Cashier ID: sgTransaction Date: 05!22/2983Payer Name: SHERMAN HOWARD
CIVIL FILING FEEFor: SHERMAN HOWARD
Amount: $350.00
CASHAmt Tendered: $350.00
Total Due: $350.00
Total Tendered: $350.00Change pmt: $9.00
03-0-01186
A fee of $45.00 will be assessed onany returned check.
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 1 of 6
IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO
Civil Action No.
Julian Ferguson, Individually and On Behalf of All Others Similarly Situated,
Plaintiff,
v.
OPPENHEIMERFUNDS, INC.OPPENHEIMER INTEGRITY FUNDSOPPENHEIMER CORE BOND FUNDWILLIAM L. ARMSTRONGJOHN V. MURPHYBRIAN W. WIXTEDROBERT G. AVISGEORGE C. BOWENEDWARD L. CAMERONJON S. FOSSELSAM FREEDMANBEVERLY L. HAMILTONROBERT J. MALONE,F. WILLIAM MARSHALL, JR. andOPPENHEIMERFUNDS DISTRIBUTOR, INC.,
Defendants.
NOTICE OF ASSOCIATED CASES
Julian Ferguson (“Plaintiff”), pursuant to D.C.Colo.L.Civ. R 7.5, notifies this Court that
the above-captioned action is associated with the following cases:
09-cv-929-WDM-KMT09-cv-3 86-JLK-KMT09-cv-525-JLK-KMT09-cv-550-JLK-KMT09-cv-703-JLK-KMT
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 2 of 6
09-cv-706-JLK-KMT09-cv-834-JLK-KMT
The cases involve some overlapping parties and counsel but involve separate mutual
funds that are managed by the same entity, OppenheimerFunds, Inc. and distributed by
OppenheimerFunds Distributor, Inc. Although the operative facts are different and the funds are
distinct, among other important differences, in an abundance of caution and in order to comply
with D.C. Colo.L.Civ.R. 7.5 and Judge John L. Kane’s memorandum dated April 14, 2009,
Plaintiff identifies the cases as related. In pertinent part, Judge Kane’s memorandum to the
counsel of record in the above actions stated that “[s]hould any further cases, generically
described as Oppenheimer Litigation be filed in this district or transferred from another district,
they will be assigned separately to me and Magistrate Judge Tafoya.” See Ex. A (Judge Kane’s
Memorandum). Plaintiff does not by this selection represent that the actions are related for any
other purpose.
Dated: May 22, 2009
Respectfully submitted,
SHERMAN & HOWARD L.L.C.
By: s/ Peter G. Koclanes Gordon W. Netzorg ([email protected] )Peter G. Koclanes ([email protected] )633 17th Street, Suite 3000Denver, Colorado 80202Telephone: (303) 297-2700Facsimile: (303) 298-0940
and
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 3 of 6
GIRARD GIBBS LLP
Daniel C. Girard ([email protected])Jonathan K. Levine * ([email protected])Aaron M. Shenin* ([email protected])Regina A. Sandler* ([email protected])601 California Street, 14th FloorSan Francisco, CA 94108Telephone : (415) 981-4800Facsimile : (415) 981-4846
ATTORNEYS FOR INDIVIDUAL ANDREPRESENTIVE PLAINTIFF JULIAN FERGUSON
* Not yet admitted in the District of Colorado.
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 4 of 6
EXHIBIT A
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 5 of 6
UNITED STATES DISTRICT COURTDISTRICT OF COLORADO
UNITED STATES COURTHOUSE901 19t° STREET
JOHN L. KANE DENVER, COLORADO 80294SENIOR JUDGE (303) 844-6118
John L Kane@,,cod.uscourts.gov
MEMORANDUM
TO: Counsel of Record in: 09-cv-386-JLK-KMT09-cv-525-JLK-KMT09-cv-550-JLK-KMT09-cv-703-JLK-KMT09-cv-706-JLK-KMT09-cv-834-JLK-KMT
FROM: Judge John L. Kane
DATE: April 14, 2009
RE: Notice in Related Matters
These cases have been reassigned to one judge and one magistrate judge
to avoid needless separate orders and schedules. Counsel should not assume that
any decisions have been made to consolidate or transfer any or all of these cases.
In 09-cv-386-JLK-KMT, a motion has been filed with the MDL panel. It is
possible that similar motions may be filed in one or more of the other described
cases. Moreover, the MDL Panel's decision(s) may affect the other cases.
I am advised that the MDL Panel may consider this litigation in May,
2009. Because this decision will affect some or all of these pending matters (as
well as cases pending in California and New York), the parties should feel free
to file whatever motions they wish, but I am inclined to abate ruling on such
Case 1:09-cv-01186-JLK Document 1-4 Filed 05/22/2009 Page 6 of 6
until the Multidistrict Litigation Panel has the opportunity to rule on the
motion(s) pending before it.
Should any further cases, generically described as Oppenheimer Litigation
be filed in this district or transferred from another district, they will be assigned
separately to me and Magistrate Judge Tafoya. For advisement purposes only,
I am sending copies of this Notice to the Judges whom I am advised by
Defendants' counsel in 90-cv-550-JLK-KMT have Oppenheimer litigation
pending before them viz.,
1. 09-cv-567-SI (N.D. Cal.) Hon. Susan Illston
2. 09-cv-1184-SI (N.D. Cal.) Hon. Susan Illston
3. 09-cv-1243-SI (N.D. Cal.) Hon. Susan Illston
4. 09-cv-1414-VRW(N.D. Cal.) Hon. Vaughn R. Walker
5. 09-cv-2433-MGC (S.D.N.Y.) Hon. Miriam Cedarbaum
6. 09-cv-0807-RJD-RML (E.D.N.Y.) Hon. C.J. Raymond Dearie
7. 09-cv-866-CBA-JO (E.D.N.Y.) Hon. Carol Amon
8. 09-cv-1296-SJ-RLM (E.D.N.Y.) Hon. Sterling Johnson, Jr.
9. 09-cv-1305-RRM-VVP (E.D.N.Y.) Hon. Roslynn R. Mauskopf