John Kroger (D)
Ben Westlund (D)
SALEM, Ore. (Legal Newsline)- OppenheimerFunds, the manager of Oregon's college savings plan, was sued Monday over losses program participants suffered, the state attorney general announced.
Attorney General John Kroger sued in Marion County on behalf of families whose savings were devalued as the result of alleged actions by OppenheimerFunds.
The lawsuit against New York-based OppenheimerFunds Inc. seeks repayment of lost assets in the Oregon College Savings Plan plus interest, along with attorneys' fees.
OppenheimerFunds is the investment manager of the Oregon 529 College Savings Network, and is marketed directly to the public. The Oregon 529 College Savings Network allows families receive a state tax deduction of as much as $4,000 a year.
Officials said investors in the college savings program lost at least $36.2 million because of Oppenheimer's alleged actions. Last year, Oregon's college savings program saw its aggregate value decline by nearly 25 percent, to about $770 million, the state treasurer's office has said.
Kroger and fellow Democrat state Treasurer Ben Westlund claim the company broke securities law and other violations, including breach of contract, breach of fiduciary duty, negligence and negligent misrepresentation, because the fund did not alert the state that program investments were placed in risky securities.
"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.
The Oregon 529 College Savings Board voted in January to remove the Oppenheimer Core Bond Fund from the state 529 portfolio. The Board also voted to terminate the Oppenheimer Limited Term Government Bond Fund.
"We are taking action on behalf of Oregon families whose college accounts were battered -- and their financial futures jeopardized -- because of OppenheimerFunds," Westlund said. "Families were doing the right thing and saving for college, but unknown to them or Oregon, their money was invested in ways that were plainly inappropriate for those saving for college or already in college."
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.