John Kroger (D)
Ben Westlund (D)
NEW YORK (Legal Newsline)- OppenheimerFunds Inc., the manager of Oregon's college savings plan, blasted the Oregon attorney general for filing a lawsuit this week against the Wall Street giant, saying he has acted in bad faith.
Oregon Attorney General John Kroger on Monday filed a lawsuit against OppenheimerFunds, hoping to recover investment losses participants in the state's college savings plan suffered. The Democratic attorney general sued on behalf of families whose savings were allegedly devalued.
Kroger is seeking repayment of lost assets in the Oregon 529 College Savings Network plan plus interest, along with attorneys' fees.
In a statement, OppenheimerFunds said it was "very disappointed" to learn a lawsuit was filed since it had "cooperated fully" with state investigators.
"Despite this cooperation and ongoing dialogue with the state, Oregon proceeded to file its suit without so much as a single meeting with OFI to discuss their concerns or potential solutions," the company said. "OFI is deeply concerned with the investigative process followed by Oregon and its decision to file a suit at this time."
Kroger and fellow Democrat state Treasurer Ben Westlund claim the company broke securities law and committed 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 on the bond markets.
As a result, it is alleged that the college savings program lost at least $36.2 million. Last year, Oregon's college savings program saw its aggregate value decline by nearly 25 percent, to about $770 million.
"OFI never engaged in any misconduct in its role as program manager for the Oregon 529 Plan," the company said. "For the state attorney to accuse OFI of wrongdoing is inaccurate, misleading and unfair."
The company said it plans to defend itself against the charges made by Kroger and Westlund.
"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 company statement said.
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.
OppenheimerFunds is a unit of Massachusetts Mutual Life Insurance Co.
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.