Oregon AG, Oppenheimer in war of press releases

Chris Rizo Apr. 15, 2009, 9:39am

John Kroger (D)

SALEM, Ore. (Legal Newsline)-A war of words -- and press releases -- has erupted between Oregon Attorney General John Kroger and OppenheimerFunds, Inc., which Kroger sued this week.

It all started Tuesday, when the Democratic attorney general slapped New York-based Oppenheimer with a lawsuit to recoup $36.2 million in losses to Oregon's college savings program.

Kroger and fellow Democrat state Treasurer Ben Westlund, in announcing their legal action, accused Oppenheimer of violating Oregon securities law and breach of their contract and fiduciary duties as the manager of the Oregon 529 College Savings Network, which includes the Oregon College Savings Plan.

Oregon officials allege that Oppenheimer invested program participants' money in risky securities rather than in a conservative portfolio.

"We intend to use the full legal power of the state of Oregon to make sure Oregon families' dreams of a college education are fulfilled," Kroger said in a statement at the time.

Oppenheimer responded to the lawsuit in a statement, saying it was "very disappointed" that Kroger and Westlund sued, especially since the company has cooperated with the state's investigation into losses to the program.

"OFI is deeply concerned with the investigative process followed by Oregon and its decision to file a suit at this time. While OFI would have preferred reasonable, good-faith discussion and resolution, it is prepared to defend itself and its reputation vigorously against these claims, which lack legal merit," the statement said.

The company vowed to "defend itself and its reputation vigorously," saying the state's lawsuit lacks merit.

Late Tuesday, another press statement was released by Kroger and Westlund, decrying Oppenheimer's response to the lawsuit and the company's assertion that the lawsuit was filed "without so much as a single meeting" with company executives.

"In truth, lawyers representing Oregon discussed the case on numerous occasions by telephone and in person with counsel for OppenheimerFunds," their joint statement said.

"Oregon repeatedly indicated that it would like to resolve the case amicably. Unfortunately, OppenheimerFunds did not take this case seriously, even after being advised that a lawsuit would be filed if OppenheimerFunds was not prepared to discuss a serious settlement."

Oppenheimer, it's your ball....

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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